Colombo Stock Exchange (CSE) rose 2.9 percent to a new record high on Monday (Jan 4) as investors stepped up their buying on the first trading day of the New Year on hopes that the country's economic recovery will gather pace.

The All-Share Price Index of the Colombo Stock Exchange climbed to 3,483.66 points by midday yesterday surpassing its previous peak of 3,390.31 on Dec 30, Reuters said.

The bourse was closed on Friday for a special New Year holiday and Monday is the first trading day in 2010.

"Investors are expecting a boom in the market this year," said Harsha Fernando CEO at SC Securities in Colombo reported Reuters.

Sri Lanka's bourse was one of the world's best performing markets in 2009, jumping 125 percent on optimism. Low interest rates and slowing inflation have also fuelled foreign investor interest, Reuters stated.

Sri Lanka's economy should grow by more than 6 percent in 2010 compared with an expected 3.5 percent in 2009 as investor confidence continues to recover, the Central Bank Governor said on Friday.

Daily average stock market turnover for 2009 was a record high 593.6 million rupees with total turnover for the year at a record 142.5 billion rupees. Average daily turnover in 2008 was 464 million rupees, reported Reuters.