Colombo share prices rose 1.79 percent on a 12.9 percent rise in fuel retailer Lanka IOC, but heavy foreign selling on John Keells Holdings also helped drive the market, brokers said.
The benchmark All Share Price Index rose 39.
45 points to 2,247.75 on a healthy turnover of 352.
19 million rupees, according to Colombo Stock Exchange figures.
Indian oil retailer Lanka IOC rose 3.
25 rupees to 28.75 rupees, as retailers speculated that the government was partly settling over 76 million dollars due to the firm soon.
LIOC, however, said they have not received any payments so far, despite being forced to sell fuel at government controlled prices.
Shares of John Keells Holdings gained on strategic selling of 600,000 shares by two foreign investors in five blocks.
The counter added 0.1 percent to close at 150.75 rupees, while market mover Dialog Telekom gained 1.
2 percent to 21.50 rupees.
The Milanka Price Index, which tracks 25 of the most highly capitalised stocks, gained 55.
42 points, or 1.96 percent, to close at 2,878.77.
On the foreign exchange market, the rupee softened against the greenback for the fourth straight day, closing at 103.32.
The dollar opened at Rs. 103.40, as against Thursday’s close of 103.24 rupees on heavy demand from importers to settle trade bills.
Traders said that there was some profit taking on the greenback, which stemmed the rupees fall, while state banks also stepped in to sell dollars.
A top Central Bank official said there was no need for panic attacks and said that the rupee will shortly bounce back to 103.00 levels against the dollar.
On the money market, the overnight call rate closed higher at 10.78 percent from Thursday's close of 10.
75 percent.
The market liquidity deficit, however, climbed further to 4.5 billion rupees, from Thursday's close of 2.
8 billion rupees.
To ease the liquidity crunch, the Central Bank, auctioned 5.0 billion rupees in reverse repurchase bills, which carried a weighted average yield of 9.90 percent. Secondary bond yields were mostly flat in thin trade, with three-year notes trading at 11.10 percent and four-year paper at 11.23 percent.