The Colombo Stock Exchange's main index dipped 0.35 percent or 19.21 points to close at 5,503.51.

"The fuel price hike hit a lacklustre market already in a holiday mood," said a stock broker asking not to be identified.

Government and central bank officials have said the move to raise gasoline prices by 6.7 percent on Saturday will have no inflationary impact.

The central bank's surprise 25-basis point rate cut to support growth last week boosted the bourse 2.4 percent over two sessions.

Turnover on Monday stood at 532.87 million rupees ($4.15 million). Foreign investors were net buyers of 102.5 million rupees worth of shares, extending the net foreign buying so far this year to 36.69 billion rupees.

The rupee closed weaker at 128.70/80 to the dollar compared with Friday's close of 128.60/70 on importer demand for dollars, dealers said.