Sri Lankan President Mahinda's Rajapaksa's ruling coalition has won a simple majority of seats in parliament, official results said on Friday, as counting continued.

Rajapaksa's United People's Freedom Alliance had won 120 seats out of 180 initially decided for the 225-member parliament, results released by the Department of Government Information showed. The next closest challenger had at least 47.

It takes 113 seats to have a majority and form the government.

The poll on Thursday was the first since Rajapaksa declared victory in May in one of Asia's longest-running and bloodiest wars, defeating the separatist Tamil Tigers and returning the entire island to government control after 25 years.

The president in January turned the victory over the Tamil Tigers into a new six-year term, and appears to have correctly calculated a resurgent economy and political momentum would get his UPFA close to a two-thirds legislative majority.

'We may be short of 12 or 13 seats to get two-thirds but that will not be a challenge for us,' said UPFA spokesman and Transport Minister Dullas Alahaperuma. 'There is no question about the victory.'

Friday's results should remove a final question mark for investors eyeing Sri Lanka as an upcoming frontier market, and provide clarity on Rajapaksa's plans for a $42 billion economy targeting 6.5 percent growth this year.

'Everyone had a wait-and-see approach for the past four months. Now that there is a clear direction in terms of policy, markets are likely to react much more favorably,' Samantha Amerasinghe, an economist at Standard Chartered Bank in Colombo, told Reuters.

The Colombo Stock Exchange extended gains into record territory on Thursday, expecting an easy win for the ruling alliance, and is up 165 percent since January 2009. It was closed on Friday after the president declared it a special holiday.

Bond dealers say demand for high-yield government securities should rise, having grown more attractive with upward pressure on the rupee currency.

Monitors did report sporadic violence. The Electoral Commission said the results of 12 seats in the central Kandy district were likely to be delayed because a re-poll had been ordered in one electorate due to violence.

The main opposition United National Party (UNP), which had won 47 seats so far, blamed the government for misusing state property and resources, echoing earlier comments the government said were designed to cover up for the opposition's own disarray.

'This is not a free and fair election at all. There was election violence and malpractice on a large scale,' UNP General Secretary Tissa Attanayake told reporters, repeating allegations the opposition made after it lost the January presidential poll.

Among the notable victors guaranteed seats by winning the most votes in their districts were the president's eldest son, Namal Rajapaksa, and cricketer Sanath Jayasuriya.

Rajapaksa has not made public the constitutional amendments he intends if his alliance were to get the required majority, save possibly creating a bicameral legislature and changing the electoral system.

The opposition had vowed to block him, saying the changes would threaten democracy by increasing his already vast powers.-Reuters