COLOMBO Aug 9 (Reuters) - Sri Lankan shares closed almost steady on Tuesday, with investor sentiment boosted by foreign investor buying, while markets waited for some firm direction on the government's economic policies.

The benchmark Colombo stock index ended 0.05 percent, or 3.18 points, firmer at 6,510.11, hovering near a more than seven-week high hit on Friday.

Foreign investors, who have sold a net 3.56 billion rupees ($24.51 million) in shares so far this year, bought shares worth a net 252 million rupees on Tuesday, extending the net foreign inflow in the last ten sessions to 1.24 billion rupees of equities.


"Investors are cautiously buying. We see retail investors are buying while some profit-taking is happening too," said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.

"Investors are optimistic and they are buying on earning hopes."

Stockbrokers said the market was waiting for a policy announcement on the economy from Prime Minister Ranil Wickremesinghe, scheduled later this month.

Analysts shrugged off a Supreme Court decision to stop considering a bill to raise the country's value-added tax because the draft has not followed due process as the government has said it will raise the tax with due process.


Shares have risen on hopes economic fundamentals would improve after the central bank on July 28 raised its main interest rates by 50 basis points each in a surprise move aimed at curbing stubbornly high credit growth that is adding to concerns about inflationary pressures.

Turnover stood at 940.2 million rupees ($6.47 million) on Tuesday, more than this year's daily average of around 731.6 million rupees.

Conglomerate John Keells Holdings edged up 1.56 percent, while Ceylon Cold Stores jumped 6.2 percent. ($1 = 145.2500 Sri Lankan rupees) (Reporting by Shihar Aneez and Ranga Sirilal; Editing by Subhranshu Sahu)