Sri Lanka stocks rise on President peace comments

[February 15, 2006 - 9.35 GMT]

Sri Lankan stocks rose in early trade yesterday as comments by President Mahinda Rajapaksa about reining in armed groups and exploring UK-style devolution for the Tamil Tigers boosted sentiment.

The Colombo All-share <.CSE> was up 0.6 percent at 2,172.21 points by 0422 GMT, after rising around 0.89 percent shortly after the open. Rajapaksa told Reuters in an interview on Monday that he would rein in armed groups the Liberation Tigers of Tamil Eelam (LTTE) say are attacking them -- a central rebel demand ahead of crunch talks in Switzerland planned on Feb. 22-23. 

He said he was looking at how to devolve power to Tamils within a unitary state along the lines of the model Britain has used. However, he also ruled out Tamil Tiger demands for a separate homeland in the island's north and east. 

"The market is up with the President declaring a UK-style solution for Sri Lanka's two-decade-old war," said Susil Fernando, investment adviser at DFCC Stock Brokers in Colombo. 

"With the president ruling out a separate state, the investors saw it as a good statement and the ideas are on the correct path," he said.

The government and Tigers agreed last week to hold talks in or near Geneva to discuss how to underpin a 2002 ceasefire that has come under severe strain from a series of deadly attacks that have raised the spectre of a return to civil war. 

"The market is also up due to rising confidence among retail investors in the market about the peace talks," Fernando said.

Investors were snapping up second-tier stocks seen to have lagged in recent weeks, such as Merchant Bank of Sri Lanka <MBSL.CM>, which rose 3.7 percent to 21 rupees, and Pelawatte Sugar <SUGA.CM>, which climbed 2.5 percent to 20.50 rupees.

Courtesy Reuters

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Last Updated Date: February 15, 2006 - 9.35 GMT