Aug 13 (Reuters) COLOMBO- Sri Lankan shares closed marginally higher on Tuesday, easing from early gains of 1.2%, after the main opposition party named a hardline former defence chief as presidential candidate, seeking to capitalise on public clamour for a decisive leader.
The rupee ended slightly weaker on importer greenback demand.
The benchmark stock index gained 1.26% as soon as trading resumed on Tuesday. Markets were closed for a holiday on Monday. The index ended 0.1% firmer at 5,949.30, its highest close since July 30. It gained 0.82% last week.
Gotabaya Rajapaksa, 70, served under his older brother, ex-president Mahinda Rajapaksa, and is widely seen as the frontrunner in a presidential election that must be held before Dec 9. Gotabaya is immensely popular among Sri Lanka's powerful Sinhala Buddhist majority, who credit him with ending the island nation's 26-year-long civil war in 2009 and believe Colombo needs a seasoned hand after the April 21 bombings. nL4N256051]
Market sources said early gains could not be sustained as retail investors sold shares.
So far this year, the index dropped about 1.7 %.
Turnover was 2.69 billion rupees ($15.21 million), more than six times of this year's daily average of about 654 million rupees so far. Last year's daily average came in at 834 million rupees.
Shares of Lion Brewery Ceylon Plc rose 3.4% and large-cap Nestle Lanka Plc climbed 1.6%.
The rupee ended at 176.90/177.00 per dollar, compared with Friday's close of 176.75/95.
The rupee fell 0.08% for the last week, but is up nearly 3.2% so far this year.
The central bank left key interest rates unchanged on July 11 as expected, after cutting them in May to support the economy as tourism and investment plummeted in the wake of deadly suicide bombings in April.
Foreign investors sold a net 729 million rupees worth of government securities in the week ended Aug. 7, extending the year-to-date net foreign outflow to 28 billion rupees, central bank data showed.