Sri Lankan shares inched higher on Thursday in their fifth straight gaining session to a fresh three-week closing high as the central bank held key policy rates steady, with trading muted by the holidays after Christmas. Sri Lanka's central bank kept its benchmark interest rates unchanged before the market opened, saying inflation and private sector credit growth have cooled to a manageable level as policy makers focus on supporting a slowing economy.

The Colombo Stock Index ended 0.08 percent firmer at 6,364.34, its highest since December 8. "Unchanged rates is a positive sign for the market. It will help the market to start the new year on a positive note," said Hussain Gani, Deputy CEO at Softlogic Stockbrokers.

Shares in Sri Lanka Telecom Plc rose 3.2 percent, while Chevron Lubricants Lanka Plc ended 3.2 percent higher and Melstacorp Ltd gained 0.9 percent. Turnover stood at 221 million rupees ($1.44 million), less than a quarter of this year's daily average of 920.5 million rupees.

Foreign investors bought shares net worth 98.2 million rupees on Thursday extending the year-to-date net foreign inflow to 18.3 billion rupees in equities.

Copyright Reuters, 2017