COLOMBO, June 3 (Reuters) - Sri Lankan shares fell for a fifth straight session on Friday and posted their lowest close in five weeks, as rising interest rates and lack of new catalysts dented investor sentiment.

The benchmark Colombo stock index ended 0.07 percent, or 4.61 points, weaker at 6,519.23, its lowest close since April 29. It declined 0.8 percent this week, its third straight weekly fall after gaining for six consecutive weeks.

ADVERTISEMENT

Treasury bill yields rose between 4 and 35 basis points to near three-year highs in the two weekly auctions through Wednesday despite the central bank leaving key policy rates steady for a third straight month on May 20.

"Investors are waiting to see some positive news and earnings are also not healthy," a stockbroker said asking not to be named.

Stockbrokers said a rise in interest rates could be detrimental to risky assets if they jumped beyond 12 percent. The average prime lending rate (AWPR) edged up 15 basis points to 10.15 percent in the week ended May 27.

Analysts said market sentiment remained weak as investors were waiting for catalysts such as a big foreign direct investment or initial public offering or inflows from the International Monetary Fund (IMF).

Investors are also concerned about foreign investment outflows, they added, with overseas investors offloading a net 5.54 billion rupees ($37.74 million) worth of equities so far this year. Foreign investors bought shares worth a net 49.2 million rupees on Friday.

ADVERTISEMENT

Turnover stood at 739.8 million rupees, just below this year's daily average of around 791 million rupees.

Shares of Sri Lanka Telecom Plc dropped 3.51 percent, while those of Ceylinco Insurance Plc fell 0.39 percent. ($1 = 146.8000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez)