By Kevin Mwanza
NAIROBI (Reuters) - The Kenyan shilling weakened on Tuesday, weighed down by energy sector importers buying dollars on the view that the local currency's gains have bottomed out, while shares rose.
At the 1300 GMT market close, commercial banks quoted the shilling at 84.10/30 per dollar, 0.3 percent weaker than Monday's close of 83.85/95.
"There is some demand from the energy guys. They feel that the shilling had been at 83.90 for so long and it may have run out of gains," said Julius Kiriinya, a trader at African Banking Corporation. The shilling is 2.4 percent stronger so far this year.
Some traders, however, expect the shilling to strengthen in the coming days from foreign investors selling dollars to buy into local debt securities.
The central bank will auction 10 billion shillings worth of 20-year bonds on Wednesday. It also plans to sell 10 billion shillings worth of Treasury bills this week.
"Shilling-denominated assets continue to offer better returns as compared to the near zero rates currently offered in the developed world," said Kenneth Karuga, a senior economist at Commercial Bank of Africa.
In stocks, the main share index, which has gained 20 percent this year, added 0.4 percent to 4,978.65 points.
Shares in East African Breweries rose 2.5 percent to 409 shillings each, while mobile phone service provider Safaricom recovered from a dip the previous session, gaining 1.4 percent to 7.10 shillings.
The two firms are the highest-capitalisation stocks on the Nairobi bourse.
"The market has picked up today on strong foreign participation," said Faith Atiti, an analyst at NIC Securities. "EABL (East African Breweries) hit a record high of 420 shillings on sustained support from foreigners."
In the debt market, government bonds worth 3.7 billion shillings were traded, up from 1.9 billion on Monday.