Kenyan shilling firms as mall siege nears end, shares dip

By Kevin Mwanza NAIROBI (Reuters) - The Kenyan shilling firmed on Tuesday, lifted by tight liquidity in the market and positive sentiment from investors as as Kenyan authorities said a stand-off with Islamist militants in a Nairobi shopping mall was nearing an end. In stocks, the main index dipped for a second straight session. The shilling was posted at 87.30/50 to the dollar by the 1300 GMT market close, firmer than Monday's close of 87.45/65. "The shilling has firmed because of the tight liquidity and the KDF (Kenya Defence Forces) victory against the militants," said John Muli, a trader at African Banking Corporation. Kenya said it was in control of the Westgate shopping mall that was attacked at the weekend but was still searching on Tuesday for Islamists who launched the assault that killed over 62 people. Traders said supply of the local currency had tightened in the market as companies paid the latest instalment of corporate tax to the government last week. The weighted average interbank lending rate rose for the 10th straight session to 8.4075 percent on Monday, from 7.9367 percent on Friday, as shilling supply tightened. "We expect the shilling to get some support once the siege is over but nothing too permanent as we enter the end month cycle," said Bank of Africa in a daily note. At the Nairobi Securities Exchange, the main share index shed 0.2 percent to 4,729.30 points, led down by shares in TPS Eastern Africa, operator of the Serena chain of hotels and luxury lodges. The hotelier's shares tumbled 6.3 percent to 45 shillings each. Kenya's tourism industry - a big earner of foreign exchange - is expected to suffer some damage from the shopping centre siege, especially if governments warn their citizens from travelling to the east African country. In the secondary bond market, debt worth 1.66 billion shillings was traded, up from 500 million on Monday