COLOMBO, June 21 (Reuters) - Sri Lankan shares fell on Tuesday for a second straight session, a day after Moody's revised down its outlook on the country's sovereign rating and as continued foreign outflows and rising interest rates weighed on investor sentiment.

Investors were also concerned over a government proposal to reintroduce capital gains tax, brokers said.

Moody's Investors Service on Monday changed Sri Lanka's outlook to negative from stable, citing further weakening in some fiscal metrics in an environment of subdued GDP growth, which could lead to renewed balance of payments pressure.

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Overseas funds offloaded a net 18 million rupees worth of equities on Tuesday, extending the year-to-date net foreign outflow to 5.79 billion rupees worth of shares.

The benchmark Colombo stock index ended down 0.22 percent, or 14.24 points, at 6,446.88. The bourse shed nearly 1 percent last week.

"Index is moving here and there on low volumes," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

"Interest rates are moving up. This is the issue, and there is not much display of interest in the market. Things are not looking that great."

Turnover stood at 474.9 million rupees ($3.26 million), well below this year's daily average of around 754.2 million rupees.

On Thursday, the bourse fell 1 percent as concerns over a government decision to reintroduce capital gains tax kept investors on the sidelines.

Sri Lanka's cabinet on Wednesday approved a proposal to reintroduce the tax, especially on land sales, with a cabinet spokesman saying no decision had been taken on whether the tax would apply to capital gains in the share market.

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Shares in Lanka ORIX Leasing Company Plc fell 3.3 percent, while Commercial Leasing & Finance Plc dropped 5.41 percent and conglomerate John Keells Holdings Plc slipped 0.56 percent.

Treasury bill yields rose between 1 and 4 basis points at a weekly auction on Wednesday. They have risen between 6 and 40 basis points since the central bank left the key policy rates steady on May 20.

The average prime lending rate edged up 24 basis points to 10.47 percent in the week ended June 10. Stockbrokers have said rising interest rates could be detrimental to risk assets if they jump beyond 12 percent.

($1 = 145.5000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips)