COLOMBO Aug 5 (Reuters) - Sri Lankan shares gained on Friday to a more than seven-week closing high on foreign buying, and as investors bought blue chips expecting better profits on hopes that the central bank's rate hike would help improve the island nation's macro-economic outlook.

Overseas investors were net buyers of 167 million rupees ($1.15 million) worth of shares on Friday, extending the net foreign inflow during the last eight sessions to 951.3 million rupees worth of equities.

However, they have been net sellers of 3.86 billion rupees worth of shares so far this year.

ADVERTISEMENT

The benchmark Colombo stock index ended up 0.6 percent, or 38.88 points, at 6,517.13, its highest close since June 14.

"Market is up on renewed buying interest after yesterday's consolidation," said Atchuthan Srirangan, senior research analyst, First Capital Equities (Pvt) Ltd.

On Thursday, the bourse ended lower on profit-taking, snapping five days of gains.

"The good thing is there is not much of selling pressure in the market. We will see the market gaining with some consolidation in between," Srirangan added.

Shares have risen on hopes that economic fundamentals would improve after the central bank last week raised its main interest rates by 50 basis points each in a surprise move aimed at curbing stubbornly high credit growth that is adding to concerns about inflationary pressures.

Stockbrokers said the market is waiting for an economic policy announcement from Prime Minister Ranil Wickremesinghe, scheduled later this month.

ADVERTISEMENT

Turnover stood at 1.05 million rupees, more than this year's daily average of around 734.1 million rupees.

Shares in conglomerate John Keells Holdings Plc rose 0.97 percent while Lanka ORIX Leasing Company Plc jumped 5.15 percent, pushing the overall index up.

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