COLOMBO, Sept 8 (Reuters) - Sri Lanka's benchmark index hit a more than one-month closing low on Thursday, dragged down by large cap shares, as investors largely stayed on the sidelines amid confusion over falling bond yields, stockbrokers said.

The benchmark Colombo stock index ended 0.09 percent lower at 6,501.89, its lowest close since Aug. 1.


Analysts said they expected shares to rise after results of the central bank's weekly treasury bill auction on Wednesday showed yields fell between 23 and 34 basis points, with the benchmark 91-day treasury bill yield falling for the first time since July 8.

"Many investors are confused because while t-bill yields are coming down, the short term fixed-deposit rates offered by banks are very high," said Prashan Ferbando, COO at Acuity Stockbrokers.

Foreign investors net sold 22.7 million rupees ($156,444) worth of shares on Thursday, the first time in seven sessions, extending the year-to-date net foreign outflow to 2.77 billion rupees worth of equities.


Turnover stood at 758.4 million rupees, slightly higher than this year's daily average of 752.4 million rupees.

Shares of Ceylon Tobacco Company Plc fell 0.50 percent, while Ceylon Cold Stores Plc ended 1.53 percent lower and John Keells Holdings Plc lost 0.67 percent. ($1 = 145.1000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)