S.Lanka shares at new 1-month high, worries remain

By Shihar Aneez

COLOMBO, Aug 4 (Reuters) - Sri Lankan shares rose 0.29 percent on Monday to their highest close in more than a month, but analysts said the market would need some good macroeconomic news to maintain a recent rally.

The All-Share index .CSE closed 7.15 points up at 2,480.60, its highest since June 26. The bourse has risen 4.7 percent in the past six sessions.

Last week's weekly gain was the largest since late March 2007 and came after some stronger than expected earnings and a major foreign deal.

"Market has recovered moderately. However, the market needs some positive news on the economic front to sustain this recovery," said Shivantha Meepage, a research analyst at HNB Stockbrokers.

"Small investors are buying selected shares after they have fallen to low levels. But if this recovery to be sustained high inflation and high interest rate should be brought down."

Sri Lankan consumer price inflation eased to a year-on-year 26.6 percent last month from a 5-year high of 28.2 percent in June as food and oil prices steadied, officials and analysts said on Thursday. See [ID:nL1602430].

The Colombo index hit its lowest close in nearly two years on July 22 and is still down 2.4 percent in 2008.

The market has been hit by worries about the civil war, high inflation and interest rates. Investors expect the difficult economic conditions to weaken corporate earnings.