Sri Lankan shares decline in thin trade, CTC slips

COLOMBO, Jan 16 (Reuters): Sri Lanka's main stock index fell to a one-week low on Friday, led by Ceylon Tobacco Company Plc even as investors waited for clarity in economic policy from the new government led by President Maithripala Sirisena.

The main stock index closed down 0.48 per cent, or 35.99 points lower, at 7,513.86, its lowest since Jan. 8.

Ceylon Tobacco Company, which lost 3.05 per cent, dragged down the overall index, stockbrokers said. Lanka IOC Plc fell 4.50 per cent.

Sirisena, who ousted former president Mahinda Rajapaksa in the Jan. 8 poll, has promised a 100-day programme to restore democracy and the economy before he dissolves parliament for a general election after April 23.

Analysts said the market was closely monitoring the new government's bureaucratic appointments to check if they were in line with its pledge of good governance and transparency.

"If the markets and the public feel that the new appointments are a mere change of hats, political risk for the new government would increase. In such a situation, markets also could react," an analyst said on condition of anonymity.

Business confidence could be dented if people with tainted governance records and lack of integrity take up public office and the political survival of the new administration "would be at stake and lead to much deeper uncertainty," the analyst said.