UPDATE 3-S.Lanka shares at record high, Asia's top performer

(Adds new high, quotes, rupee close)

By Shihar Aneez and Ranga Sirilal

COLOMBO, Oct 5 (Reuters) - Sri Lanka's stock market .CSE, Asia's best performer, hit a record high on Monday on investor hopes for strong post-war economic growth boosted by easing inflation and declining interest rates.

With a return of over 106 percent so far this year, it is the second-best performing bourse in the world after Lima's stock market. Its rise is around double that of the benchmark emerging market equities index .MSCIEF.

The All-Share Price Index of Colombo Stock Exchange jumped 3.22 percent to 3,115.25 points by 0849 GMT, surpassing the previous record of 3,038.48 points traded on Feb. 19, 2007.

It closed 2.66 percent or 80.23 points firmer at 3,098.24.

"This is more than expected," said an analyst on condition of anonymity. "We expect corrections on some of those shares, which have risen with the rally without any reasons. Only clear signs of quarterly earnings could help to maintain the rise" Danushka Samarasinghe, the head of research at Asia Securities, said the surge was due to improving economic numbers:

"The last quarter of this year and the next year are expected to grow much higher due to optimism on Sri Lanka's post-war economy. We expect the index to move further up as the psychological barrier of the previous record is surpassed."

Sri Lanka won a 25-year war against the Tamil Tiger rebels in May and the market has risen over 62 percent since.