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By Oludare Mayowa
LAGOS, June 5 (Reuters) - Nigerian stocks hit a 23-month high on Monday, extending last week’s rally and helped by gains in cement, fuel retailing and banking shares.
A pickup in oil prices and a more stable currency have improved economic prospects in Nigeria, prompting investors to buy into the stock market.
Shares rose on Monday for the fifth consecutive session, with Dangote Cement, which accounts for a third of the market’s value, surging 8.85 percent.
It helped push the benchmark index up 4.01 percent to cross 32,000 points in early trade.
First Bank jumped by its 10 percent maximum limit to trade at 7.07 naira, the highest level since July 30, 2015, while gasoline retailer Mobil Oil was also up 10 percent, at 319.72 naira.
The banking index rallied 11.6 percent, outperforming the overall market as fund managers took positions in anticipation of upbeat first-half results from Nigerian companies, due out next month.
“Some major players see positive signs on the economic outlook and are taking positions to benefit from possible improved performances in all the sectors of the economy,” Rasheed Yusuf, senior stock dealer at Trust Yields Securities and Investment Ltd, said.
Low valuations also made stocks attractive, he said.
Africa’s largest economy, grappling with a currency crisis brought on by low oil prices which hammered its foreign reserves and created chronic dollar shortages, has resorted to regular injections of dollars by the central bank to narrow the spread between the official and black market rates.
The Nigerian naira has rallied on the black market to 375 from around 520 per dollar before the central bank started aggressive intervention in the foreign exchange market in February to improve liquidity and ease pressure on the local currency.
“The increase in the supply of foreign exchange, improved crude oil production and prices, improved investor confidence in the economy and an increase in the participation of both local and foreign investors in the market,” have been driving the market’s recent gains, said FSDH Merchant Bank in a research note. (Reporting by Oludare Mayowa; Editing by Greg Mahlich and Susan Fenton)