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The mechanisms of momentum transfer and shear stress of liquid-particle suspensions in two-dimensional Couette flow are studied using direct numerical simulation by lattice-Boltzmann techniques. The results obtained display complex flow phenomena that arise from the two-phase nature of the fluid including a nonlinear velocity profile, layering of particles, and apparent slip near the solid walls. The general rheological behaviour of the suspension is dilatant. A detailed study of the various momentum transfer mechanisms that contribute to the total shear stress indicates that the observed shear thickening is related to enhanced relative solid phase stress for increasing shear rates.