Sri Lankan rupee recovers from 7-month closing low; stocks rise

COLOMBO, Sept 9 (Reuters) - ** Sri Lanka's rupee closed higher on Monday from its lowest level in more than seven months hit in the previous session after foreign fund outflows from government securities showed a declining trend, while stocks rose for the first time in four sessions.

** The rupee LKR=LK ended 0.2% firmer at 180.40/60 per dollar, edging up from its lowest since Jan. 28 that was hit on Friday. It closed at 180.80/181.00 on Friday. The currency is up 1.2% this year.

** Foreign investors sold government securities worth 500 million rupees in the week ended Sept. 4, data showed, extending the year to date net foreign outflow to 53.7 billion rupees through Sept. 4, central bank data showed.

** Foreigners sold 25.7 billion rupees worth of government securities in the previous two weeks.

** A senior central bank official said on Thursday that outflows from the government securities have been settling following the central bank's rate cut last month.

** The central bank lowered rates for the second time in four months on Aug. 23 to boost sluggish growth after tourism and investments plummeted following deadly Easter Day bomb attacks by Islamist militants. ** Central bank Governor Indrajit Coomaraswamy after the policy said the bank was ready to cope with the outflow of $700 million foreign funds invested in Sri Lankan government securities. Exit of some funds had resulted in some pressure on the local currency. ** Meanwhile, the benchmark stock index .CSE closed firmer on Monday, ending a three straight session losing streak. It rose 0.31% to 5,816.52, edging up from its lowest close since July 25 hit on Friday. The bourse fell 1.6% last week.

** Investors have been in a wait-and-watch mode since the main opposition party named a hardline former defence chief as its presidential candidate. ** So far this year, the stock index has dropped about 3.9%. ** Equity market turnover was 381.5 million rupees ($2.11 million) on Monday, around half of this year's daily average of about 649.1 million rupees so far. Last year's daily average was 834 million. ** Foreign investors sold a net 1.1 million rupees worth of shares on Monday, extending the year-to-date net foreign outflow to 1.73 billion rupees worth of equities, according to index data. ** For a report on global markets, click MKTS/GLOB ** For a report on major currencies, click FRX/ ($1 = 180.4500 Sri Lankan rupees)

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Bernard Orr)

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