COLOMBO, June 14 (Reuters) - Sri Lankan shares closed lower on Tuesday, slipping from a more than one-week high hit in the previous session, on concerns over rising interest rates and foreign fund outflows.

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.

ADVERTISEMENT

Stockbrokers said a rise in interest rates could be detrimental to risky assets if they jumped beyond 12 percent. The average prime lending rate edged up 8 basis points to 10.23 percent in the week ended June 3.

Overseas funds have offloaded a net 5.76 billion rupees worth of equities so far this year, but they net bought 73.8 million rupees worth of shares on Tuesday.

The benchmark Colombo stock index ended 0.31 percent lower at 6,518.08, its lowest close since April 29 and slipping from its highest close since June 1 hit on Monday.

The index gained 0.17 percent last week, snapping a three-week losing streak.

ADVERTISEMENT

Turnover stood at 825.4 million rupees ($5.70 million), the highest since May 27, and more than this year's daily average of around 772.1 million rupees.

Shares in Nestle Lanka Plc fell 1.40 percent, while Dialog Axiata Plc fell 1.82 percent. ($1 = 144.8000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)