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Sri Lankan shares post over 2-wk closing high

COLOMBO, Nov 23 (Reuters) – Sri Lankan shares ended at their highest in more than two weeks on Monday after the government proposed a slew of measures in its budget for next year to boost the capital market.

The government announced on Friday a raft of steps, including the removal of a 0.3 percent share transaction levy, to stimulate trading in the share market and increase liquidity.

"This will help address one of the major drawbacks of the Sri Lankan share market," Vajira Kulatilaka, the Colombo Stock Exchange chairman, said in a statement.

The main stock index ended 0.55 percent, or 38.40 points, firmer at 7,055.84, its highest close since Nov. 6.

"The market responded positively because the budget reduced corporate tax and readjusted the value added tax (VAT)," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

Turnover was 884.8 million rupees ($6.20 million) on Monday, less than this year’s daily average of 1.1 billion rupees.

Shares in conglomerate John Keells Holdings Plc rose 1.67 percent, while Nestle Lanka Plc rose 3.56 percent.

Foreign investors were net sellers of 58.95 million rupees worth of equities on Monday, extending the year-to-date net foreign outflow to 3.65 billion rupees.

Rating agency Fitch said in a statement that it maintained a negative outlook on the telecom sector based on uncertainty over proposals to increase taxes, which are likely to lower profitability and increase leverage, if implemented.

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