COLOMBO, June 8 (Reuters) - Sri Lankan shares closed steady on Wednesday as positive sentiment after an IMF loan approval was offset by concerns over rising interest rates and foreign fund outflows.

Turnover was 390.8 million rupees ($2.68 million), the lowest since March 19, and nearly half of this year's daily average of around 782.5 million rupees.

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The benchmark Colombo stock index ended 0.03 percent higher at 6,526.12.

"We don't expect a lot until the interest rates are down," said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd.

Treasury bill yields have risen between 16 and 36 basis points to near three-year highs in the last three weekly auctions through Wednesday despite the central bank leaving key policy rates steady for a third straight month on May 20.

The International Monetary Fund's (IMF) executive board approved a three-year $1.5 billion loan to support Sri Lanka's economic reform agenda, the global lender said on Saturday.

Investors are concerned about foreign outflows, with overseas investors offloading a net 38.2 million rupees worth of shares on Wednesday, extending the year-to-date net foreign outflow to 5.7 billion rupees.

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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 8 basis points to 10.23 percent in the week ended June 3.

Ceylon Cold Stores Plc rose 1.90 percent, Ceylon Tobacco Company Plc gained 0.91 percent, Sri Lanka Telecom Plc added 0.76 percent, while conglomerate John Keells Holdings Plc increased 0.32 percent. ($1 = 145.7000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)