COLOMBO, Oct 8 Sri Lanka's rupee ended flat on Monday, holding above last month's all-tim

COLOMBO, Oct 8 (Reuters) Sri Lanka's rupee ended flat on Monday, holding above last month's all-time closing low, and the stock market fell as blue chips led losses in thin trade.

The rupee closed at 113.45/113.53 per dollar, level with Friday's close. The currency hit an all-time closing low of 113.57/113.62 on Sept. 18.

''One state bank offered at 113.49 and another state bank bought at 113.47, while importers and exporters continued to stay away from the market, expecting changes in coming weeks,'' said a currency dealer.

The rupee has depreciated about 5.7 percent so far this year, on top of a 5 percent fall in 2006.

Some analysts expect it to weaken to 114.50 by the end of the year. The six-month forward rate stood at 121.15/121.43.

The rupee is weakening mainly due to a hefty trade deficit caused by costly fuel imports, and inflation that quickened to 17.5 percent in September as measured on a 12-month rolling average.

The Colombo All Share <.cse> index closed down 0.54 percent, or 13.88 points, at 2,572.77.

Heavyweight Dialog Telekom fell 1.06 percent to 23.25 rupees, as calculated on a weighted average, and leading fixed line telephone operator Sri Lanka Telecom ended down 0.73 percent at 34.00 rupees a share.

Conglomerate John Keells Holdings closed 0.19 percent weaker at 128.50 rupees.

''Most investors were cautious in a dull market, while heavyweight counters experienced price dips,'' said Hussain Ghani, assistant director at Asia Capital stockbrokers.

Turnover was 78.41 million rupees ($0.69 million), a fraction of last year's average daily turnover of 400 million rupees.

Foreigners purchased shares worth 16.81 million rupees.

The bourse is down by 15.3 percent from its record intraday high of 3,038.48 on Feb. 19, and has dropped 5.5 percent this year.

Interbank lending rates or call rates fell to 17.236 percent from 19.41 percent on Friday.

''The market had ample cash after a matured bond infused around 7 billion rupees into the market,'' the currency dealer said.

($1=113.49 rupees) REUTERS MP HS1748