COLOMBO May 11 (Reuters) - Sri Lankan shares rose for a fifth straight session on Wednesday and posted their highest close in four months, led by gains in diversified and beverage stocks including Ceylon Tobacco Company Plc and Nestle Lanka Plc.

However, the gains were capped as foreign investors continued to sell and on concerns that the government's move to increase the value added tax and impose new taxes, effective from May 2, would hit the bottom lines of companies.

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"Market was up on the positive sentiment from last few days," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

The benchmark stock index rose 0.36 percent to 6,661.45, its highest closing level since Jan. 8.

Shares of Ceylon Tobacco Company rose 0.9 percent, while Nestle Lanka gained 1.2 percent.

Turnover was 1.26 billion rupees ($8.7 million), the highest since April 29, and well above this year's daily average of around 784 million rupees.

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Foreign investors offloaded a net 452.8 million rupees worth of shares, extending the net selling so far this year to 3.75 billion rupees worth of equities.

The stock index gained 1.2 percent last week, its fifth straight weekly rise. The 14-day relative strength index stood at 81.677 on Wednesday, compared with Tuesday's 80.541, Thomson Reuters data showed. A level of 70 and above indicates the market is overbought. ($1 = 145.2000 Sri Lankan rupees) (Reporting by Ranga Sirilal; Editing by Subhranshu Sahu)