Sri Lanka stocks soared by six percent in morning trade Friday on anticipation that the Tamil Tiger held northern town of Killinochchi had fallen to the military.

The All Share Index (ASI) was up by six percent (90.16 points) while the more sensitive Milanka Index was up by 4.52 percent (73.67 points) by midday.

"The market has risen by 89 points driven by interest in all key stocks mainly following the anticipated news of the fall of Killinochchi," said Danushka Samarasinghe, research manager at Asia Securities.

"However, the rise of the broad market index is supported by relatively small turnover. If information is official it could trigger a mini rally in the anticipation of a final solution close at hand."

Turnover was only 71.2 million rupees.

The military said its troops had entered Kilinochchi in a pincer move and that it was confident of completely capturing the town soon as the Tigers had begun withdrawing.