Reuters - Sri Lankan shares hit a one-year closing high on Tuesday with foreign investors buying blue chips such as John Keells Holdings Plc and as the island nation regained a trade concession from the European Union (EU).

The EU on Tuesday said Sri Lanka has regained a lucrative trade concession, mainly for its top exports garments.

The Colombo stock index ended 0.49 percent firmer at 6,692.33, its highest close since May 16, 2016. The index added 0.5 percent last week, its seventh straight weekly gain.

Turnover stood at 1.17 billion rupees ($7.67 million), more than this year's daily average of 889.8 million Sri Lankan rupees ($5.83 million).

"Today the foreigners got active and with that we have seen retail investor's also returning," said Dimantha Mathew, head of research, First Capital Holdings PLC.

Foreign investors net bought shares worth 281.05 million rupees, extending the year-to-date net foreign inflows to 17.08 billion rupees.

Reduction of 36-38 basis points in T-bill yields in the last three weeks, stable currency on expectation of inflows from foreign borrowing, and an IMF statement on the disbursement of the third tranche of a $1.5 billion loan, have helped boost sentiment, analysts said.,,

Shares in Dialog Axiata Plc rose 4.31 percent while Sri Lanka Telecom Plc rose 2.35 percent and John Keells Holdings Plc gained 0.85 percent.