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Sri Lanka stocks close higher; rupee kept down

March 07, 2008 (LBO) - Sri Lanka's stocks closed marginally higher Friday with the help of heavy trading in Sri Lanka Telecom shares, brokers said. The market All Share Index closed up 1.5 points at 2,567.79 with the more liquid Milanka Index closing up one point at 3,217.91.

In forex markets the rupee briefly spiked to 107.50 to the US dollar in intra day trading.

However central bank intervention soon after pushed the rupee down again to 107.75 levels, dealers said.

Sri Lanka's monetary policy has been tight in the past few weeks and the central bank has been buying dollars heavily.

In equity markets, the state telecom operator Sri Lanka Telecom was sought after during the week with the most number of shares changing hands Friday while the share closed 50 cents higher at 36.50.

Around 1.88 million SLT shares changed hands Friday after heavy trading earlier in the week as well.

Brokers said the interest in SLT was fuelled by speculation over its court case on the Maxis deal.

Sri Lanka's Supreme Court halted the sale of shares of the country's largest fixed access operator to a Malaysian firm in June 2007 following a fundamental rights petition.

Japan's NTT which holds a 35.2 percent stake in Sri Lanka Telecom was negotiating to sell a 25.3 percent stake of the telco to the Usaha Tegas group of Malaysia controlled by billionaire Ananda Krishnan.

Meanwhile, prices of plantations stocks were down on profit taking after a rally in recent weeks owing to strong commodity prices, but analysts said they still had potential.
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With the increase in the price of crude oil in international markets, commodity companies with palm oil, rubber and tea will benefit, says Channa Amaratunga of Boston Capital, a boutique investment house in Sri Lanka.

Palm oil that can be used as an alternative to petroleum fuel will be become more attractive as a fuel with rising crude oil prices.

Natural rubber producers will likewise benefit with prices of its competitor synthetic rubber, derived from petroleum, being pushed up on the back of higher crude oil prices.

Analysts also forecast increased demand for tea as the main buyers of Sri Lanka tea are oil exporting countries in the Middle East and Russia.

Sri Lanka's tea production for 2007 fell by six million kilograms to 304 million kilograms as bad weather and effects of a strike hit production in the early part of the year but prices were high and export earnings exceeded a billion dollars for the first time.

The Colombo Stock Exchange has 18 plantations and five oil palms companies listed.

Meanwhile, Lanka IOC share closed up one rupee at 22.75 on the Colombo bourse. Trading in LIOC shares added over 22.97 million rupees to the total turnover, Friday.

Distilleries closed flat at 100.
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50 rupees with 450,400 shares changing hands.

John Keells Holdings share that was sought after during the week closed 1.75 rupees lower at 120.25.

Mobile operator Dialog Telekom closed 17.75 rupees flat.

Interest in plantation stocks was lower for the week while Lanka Cement also continued to generate interest on speculation of India's Birla group taking over its plant in northern Jaffna.

But Lanka Cement closed 50 cents lower at 15.75 rupees Friday.

Total turnover was 403 million rupees on Friday.

For the past week, the All Share Index had gained 37.99 points (1.50 percent) while average weekly turnover was 357.1 million rupees.

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