S.Lanka shares up 5 pct after rebel base seized

By Shihar Aneez

COLOMBO, Jan 2 (Reuters) - Sri Lankan shares surged 5.02
percent on Friday to a near one-month closing high from a more
than four-year low, on the country's military capturing the
Tamil Tiger rebel capital, boosting expectations of an end to
the civil war and the strengthening of the economy.

But the rupee fell to an all-time low due to importer demand
for dollars.

Soon after the bourse opened for its first day of trading in
2009, the military said troops had fought their way into the
Tamil Tiger stronghold of Kilinochchi deep in the north and that
the fall of the town would come within hours.

Later in the evening President Mahinda Rajapaksa officially
announced the military had captured the separatist Tamil Tigers'
headquarters town of Kilinochchi, in one of the biggest blows to
the rebels in years. [nSP417902]

The Colombo All-Share index .CSE rose 75.44 points to
1,578.46, to its highest close since Dec. 5, last year from its
lowest close since Dec. 2, 2004.

The market had fallen 40.8 percent in 2008 on economic and
war worries.

"There was a surge in the market after the news of
Kilinochchi being captured," said Mohandas Thangarajah, a
stockbroker at First Guardian Equities. "It gave much-needed
positive momentum to the market."

Market heavyweight and the island nation's No.1 fixed-line
phone operator Sri Lanka Telecom SLTL.CM jumped 8.87 percent
to 33.75 ruepes a share as calculated on a weighted average.

Oil retailer Lanka IOC LIOC.CM, a subsidiary of Indian Oil
Corporation (IOC.BO), surged 11.48 percent to 17 rupees from its
lifetime low, while top conglomerate John Keells Holdings
JKH.CM rose 2 percent to 51 rupees.

Top private listed lender Commercial Bank of Ceylon
COMB.CM closed 3.36 percent firmer at 69.25 rupees, while
Seylan Bank SEYB.CM, owned by Ceylinco Consolidated, jumped
11.4 percent to 31.75 rupees.

Ceylinco Consolidated announced a credit card scam on Dec.
22 in one of its non-listed companies. Analysts estimate the
amount involved to be around 26 billion rupees. ($228.8
million).

The central bank on Monday said it had decided to dissolve
Seylan Bank's SEYB.CM board of directors with immediate effect
to maintain the stability of the financial system after a
liquidity crunch arose from the credit card scam. [nCOL416535]

The market turnover was 109.5 million rupees ($0.96
million), less than a quarter of last year's daily average of
464 million rupees.

The rupee LKR= fell to its lifetime low of 113.85/114.00
per dollar, down from Thursday's 113.15/25 surpassing its
previous all-time low of 113.80/114.00 level.

"A state bank, which normally represents the central bank
bought dollars at 113.80 giving direction to the market, said a
currency dealer. "There was less amount of dollars in the
market, but importer demand was bit high."

The rupee rose as much as 0.8 percent early in the day after
the central bank's move, compelling banks to sell more dollars.
Also see [ID:nCOL271192].

The Sri Lankan economy is estimated to grow by 6.0 percent
in 2009, while inflation should fall to 8-9 percent by mid-year,
the governor of the central bank said on Friday. [nCOL411052].

The interbank lending rate or call money rate CLIBOR edged
down to 13.041 percent from Monday's 13.124 percent.

For secondary market rates, please see <0#LKBMK=>.