COLOMBO May 19 (Reuters) - Sri Lankan shares fell on Thursday to an over one-week low, led by heavyweights amid foreign selling along with sluggish business activity after floods and landslides dented general business sentiment.

Hopes faded on Thursday for the survival of about 150 people trapped under the mud and rubble of two landslides in Sri Lanka, as heavy rain hampered rescue operations and the death toll from the disaster rose to 43 as of 0630 GMT.

Investors also awaited some cues on the interest rates ahead of the central bank's May monetary policy decision, which is due on Friday.

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The benchmark stock index fell 0.48 percent, or 32.02 points, to 6,648.13, its lowest close since May 10.

Turnover was 1.2 billion rupees ($8.19 million), well above this year's daily average of around 780 million rupees.

Foreign investors, whose selling accounted for 72 percent of the total turnover, net sold 578.4 million rupees worth shares, its worst outflow since March 17. They have net sold 4.25 billion rupees worth shares so far this year.

"There was lack of retail investor participation in the market," a stockbroker said asking not to be named.

Stockbrokers said manufacturing and banking sectors might get affected due to low employee turnout during the floods.

Concerns over a government move to increase the value added tax and impose new taxes, which could hit the bottom line of many companies, also hit the sentiment.

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Yields on T-bills, which move in tandem with market interest rates, rose between 11 and 14 basis points at a weekly auction on Wednesday ahead of the central bank monetary policy rate announcement later on Friday.

Top conglomerate John Keells Holdings dropped 1.1 percent, while Ceylinco Insurance PLC ended down 2.85 percent, dragging the overall index.

($1 = 146.6000 Sri Lankan rupees) (Reporting by Shihar Aneez; Editing by Sherry Jacob-Phillips)