By Shihar Aneez 
    COLOMBO, Sept 3 (Reuters) - Sri Lankan shares fell 0.28 
percent to a six-week low on Wednesday, led by market heavyweight 
Dialog Telekom <DIAL.CM> as investors sold it on the expectation 
of lower profits from the blue-chip firm.  
    Dialog, Sri Lanka's top mobile phone operator, fell 2.27 
percent to a new life closing low of 10.45 rupees a share, 
calculated on a weighted average. It accounts for over 11 percent 
of the Colombo Stock Exchange's market capitalisation.  
    "Expectations on lower profitability in the company are 
making investors move away from the stocks," Dharshi Ganeshan, a 
research analyst at Bartleets Mallory Stockbrokers, said. 
    He said investors had expected a rebound once the shares hit 
11 rupees. "But, since the price is falling beyond 11 rupees, 
investors are selling the shares and moving to other stocks." 
    On Aug. 13, Dialog posted a 78 percent fall in its June 
quarter profit compared to the same period a year earlier. The 
shares have fallen 17.3 percnt since then. 
    Traders and analysts said investors are worried about rising 
competition among telecom firms and the expected entrance of 
India's Bharti Airtel <BRTI.BO> into the market this year. 
    The Colombo All-Share index <.CSE> fell 6.63 points to 
2,393.71, its fourth straight fall and lowest close since July 
25. 
    Top fixed-line telephone operator Sri Lanka Telecom <SLTL.CM> 
closed 1.09 percent down at 45.50 rupees, while top private 
lender Commercial Bank of Ceylon <COMB.CM> fell 0.83 percent to 
120 rupees, both in thin trade. 
    The top conglomerate by market capitalisation, John Keells 
Holdings <JKH.CM>, fell 0.75 percent to 99 rupees a share. 
Traders said lingering sentiments from a court ruling last month 
that is expected to cost the firm more than $12 milion was behind 
the drop.  
    Shares in oil retailer Lanka IOC <LIOC.CM> closed 4.12 
percent firmer to 25.25 rupees a share, following the easing in 
global crude oil prices. 
    Market turnover was 182.9 million Sri Lankan rupees ($1.70 
million), less than half of last year's daily average of 400 
million rupees 
    Sri Lanka's central bank on Tuesday said it had dropped 
policy rates as its main tool for managing inflation, after 
seeing success with a reserve money targeting approach. 
    Chief Economist Nandalal Weerasinghe this week said the rupee 
would have risen to beyond 100 per dollar if the central bank had 
not intervened in the market by buying up $350 million worth of 
rupees this year. Also see [ID:nCOL217317]. 
    The rupee <LKR=> closed firmer at 107.65/68 per dollar from 
Tuesday's close of 107.75/78 on high call money rates and 
intervention from a state bank. 
    "A state bank bought dollars at 107.65 preventing the rupee 
appreciation," a currency dealer said. 
    The interbank lending rate or call money rate <CLIBOR> rose 
to around 18.5 percent before closing 16.994 percent, down 
marginally from Tuesday's 17.062 percent. 
 (Editing by Bryson Hull) 
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 ($1=107.70 Sri Lankan Rupee) 
Keywords: MARKETS SRILANKA/