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Sri Lanka shares weaken despite military gains

Jan 05, 2009 (LBO) - Sri Lankan shares shed early gains to end 1.11 percent weaker Monday despite more military successes against Tamil Tiger rebels, with brokers saying the market is likely to remain quiet until investment funds return. The army made more gains Monday, seizing another town held by the rebels as they pushed deeper into Tiger territory.

Brokers said the market has been in the doldrums for months as high inflation and interest rates eroded corporate profitability and also prompted investors to prefer higher yielding money market instruments to equities.

In Monday's trade, a crossing of 338,000 Ceylinco Insurance shares done at 175 rupees contributed almost half the day's turnover.

The stock ended down 12 percent at 175 rupees.

Ceylinco Insurance non-voting shares were the biggest loser of the day, down 33 percent to 94.25 rupees.

Lanka Cement was the most actively traded stock. It ended nine percent down at 7.50 rupees.

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The All Share Price Index down 17.49 points at 1,560.97 while the more liquid Milanka shed 1.68 percent (28.53 points) to end at 1,668.28.

Turnover was 139 million rupees.

"The market dropped towards the end of trading mainly because buying support is still not to be seen," said Yadhavan Jayaram of Bartleet Mallory Stock Brokers.

It was still mainly small investors who were speculating in the market and who don't have the holding power to sustain the momentum.

"Institutional buying has not come in yet so the market is not able to sustain the momentum. Until we see institutional support coming in the market will continue to remain quiet."

The share market saw a minor rally on thin volumes Friday on news that the army had capture a key northern town held by the Tigers.

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