COLOMBO - Sri Lankan shares closed higher on Wednesday as banks and diversified shares gained after the its central bank asked licensed lenders to cut interest rates. The rupee closed weaker.

** The country's central bank on Tuesday said that the Monetary Board decided to order the licensed banks to reduce interest rates on all loans and advances by at least 200 basis points by Oct. 15, 2019.

** As a result, the benchmark stock index ended 0.33% up at 5,762.40. So far this year, the stock index has dropped 4.8%.

** Equity market turnover was 220.3 million Sri Lankan rupees ($1.21 million), well below this year's daily average of about 663.9 million rupees so far. Last year's daily average was 834 million.

** Foreign investors bought a net 13 million rupees worth of shares on Wednesday, but they have been net sellers of 2.79 billion rupees worth of equities so far this year, according to index data.

** Meanwhile, the Sri Lankan rupee weakened after the International Monetary Fund (IMF) lowered the country's growth forecast for 2019.

** The rupee closed 0.28% weaker at 181.55/70 to the dollar, compared with Tuesday's close of 181.05/25. However, the currency is up 0.58% for the year.

** The IMF said it has cut its forecast for Sri Lanka's 2019 economic growth to 2.7% from 3.5%, as the Easter Sunday attacks on hotels and churches earlier this year dented tourism and broader business activity.

** Foreign outflows from government securities, one of the major reasons behind the rupee's weakness recently, may not see a respite till the end of parliament elections in 2020, some analysts said.

** The central bank does not release foreign flow numbers on a daily basis, but weekly data in the past four weeks has shown a steady outflow.

** Foreign investors sold government securities worth 545.9 million rupees in the week ended Sept. 18, data showed, extending the net foreign outflow so far this year to 54.9 billion rupees through Sept. 11, central bank data showed.

($1 = 181.5000 Sri Lankan rupees)

(Reporting by Ranga Sirilal; editing by Uttaresh.V) ((ranga.sirilal@thomsonreuters.com; +94-11-232-5540; Reuters Messaging: ranga.sirilal.thomsonreuters.com@reuters.net ; www.twitter.com/rangaba))