UPDATE 1-China to loan Sri Lanka $290 mln for airport, railways

(Adds finance ministry statement in para 4)

COLOMBO, March 10 (Reuters) - China has agreed to lend $290 million to Sri Lanka to build a new airport and revive its railway network, the island nation's foreign ministry said on Wednesday.

China will provide a $190 million loan through its funding arm, Exim Bank, to construct the island's second airport and $100 million to boost the capacity of the Sri Lankan railway, the ministry said in a statement.

China was the largest foreign funding source for Sri Lanka in 2009 with $1.2 billion followed by the Asian Development Bank with $424 million.

In a statement, Sri Lanka's ministry of finance on Wednesday said India had agreed to provide a $67.4 million loan under a supplementary credit line to upgrade its southern railway line. China and India are increasingly competing for lucrative and strategic investments in Sri Lanka since the end of its 25-year civl war in May last year.

Both India and China provided military assistance, including ammunition, in the final phase of the war. (Reporting by Shihar Aneez; Editing by Sugita Katyal)