COLOMBO, July 8 (Reuters) - Sri Lankan shares rose for a third straight session on Friday and posted their highest close in two weeks, as foreign investors continued to buy into banking and diversified stocks after recent losses.
Overseas investors, who have offloaded shares worth a net 5.63 billion rupees ($38.83 million) so far this year, bought equities worth a net 179.7 million rupees on Friday.
Turnover rose to the highest level since May 27, at 1.02 billion rupees, well above this year's daily average of 736.1 million rupees.
"Buying interest is slowly coming into the market, with signs of an improvement in macroeconomic factors," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.
"Net foreign buying is also boosting local investors' confidence."
The benchmark Colombo stock index ended 0.88 percent higher at 6,366.31, its highest close since June 24. It gained 1.26 percent this week, the first weekly gain in four.
Shares have been on a downward trend recently, hitting their lowest close since April 7 on Monday after falling 10 out of 11 sessions, on worries over a capital gains tax on stocks, high interest rates and policy uncertainty.
Shares of Ceylon Cold Stores Plc jumped 6.31 percent, while those of conglomerate John Keells Holdings Plc and Commercial Bank of Ceylon Plc rose 1.01 percent and 1.64 percent, respectively. ($1 = 145.0000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)