Thailand's benchmark SET index extended gains in the afternoon trading session, reaching a new 16-year high on foreign buying and strong demand for laggard banking stocks, traders said.

By 0905 GMT, Thai main index was trading up 1.27 percent at 1,227.17, the highest since July 11, 1996. Shares in Kasikornbank Pcl jumped 4.8 percent to 162.5 baht and Siam Commercial Bank Pcl gained 4.4 percent to 154.50 baht.

Foreign investors bought shares for around 1.2 billion baht ($38.97 million) in the morning session, traders said.

"Banks have seen a bit strong pick up, with some banks actually more attractively valued after their better than expected first quarter results," said Viwat Techapoonphol, strategist of broker Tisco Securities.

The index is likely to test 1240 and 1250 in the next few weeks, as some underperforming stocks, including telecoms shares, might gain further after earnings announcement, he said. Listed firms are due to to release the first quarter results by May 15.

1618 (0918 GMT)

(Reporting by Viparat Jantraprap in Bangkok; viparat.jantraprapaweth@thomsonreuters.com)