COLOMBO - Sri Lankan shares rose for the second straight session on Wednesday to a near 12-week closing high, as investors bought diversified stocks ahead of a key policy rates announcement later this week.

** Sri Lanka's central bank is expected to leave its key interest rates unchanged on Thursday, a Reuters poll showed, after cutting them in May to support the economy as tourism and investment plummeted in the wake of Easter Sunday bombings.

** The benchmark stock index hit its highest close since April 18 on Wednesday, buoyed by the government's decision to launch a $2.2 billion Japan-funded Light Railway Transit (LRT) project and some other stalled infrastructure projects, brokers said.

** The index ended up 0.13% to 5,521.83. It rose 2.67% last week, notching its second consecutive weekly gain. However, it is down 8.77% so far this year.

** Shares in Lion Brewery Plc rose 7.21%, Hemas Holdings Plc ended 8.21% firmer and conglomerate John Keells Holdings Plc ended up 0.07%.

** Stock market turnover was 548.3 million rupees ($3.13 million), in line with this year's daily average of about 542.3 million rupees. Last year's daily average came in at 834 million rupees.

** Foreign investors sold a net 267.6 million rupees worth of shares on Wednesday, extending the year-to-date net foreign outflow to 7.24 billion rupees, the index data showed.

** The government's launch of central highway and light railway projects helped lift hopes that the country's transformation would result in a faster economic growth rate, stockbrokers said.

** Sri Lanka is unlikely to hit its full-year economic growth target of 3-4% following Easter Sunday bombings and a Reuters poll has forecast growth to slump to its lowest in nearly two decades this year.

** Meanwhile, the currency closed firmer at 175.50/60 per dollar, compared with Tuesday's close of 175.70/80, as dollar sales by banks surpassed importer greenback demand. The rupee rose 0.17% last week, and is up 4.04% so far this year.

** The rupee dropped 16% in 2018 and was one of the worst-performing currencies in Asia.

** The island nation raised $2 billion via 5-year and 10-year sovereign bond sales last month, tapping global capital markets for the second time in three months.

** Foreign investors sold a net 3.93 billion rupees worth of government securities in the week ended July 3, extending the year-to-date net foreign outflow to 22.4 billion rupees, the central bank data showed.

** The central bank cut its key interest rates on May 31 to support a faltering economy as overall business and consumer confidence slumped following deadly bomb attacks in April.

($1 = 175.3000 Sri Lankan rupees)

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu) ((ranga.sirilal@thomsonreuters.com; +94-11-232-5540; Reuters Messaging: ranga.sirilal.thomsonreuters.com@reuters.net ; www.twitter.com/rangaba))