(Corrects percentage and absolute change in paragraph 2)
COLOMBO, Oct 20 (Reuters) - Sri Lankan shares rose on Tuesday, recovering from a more than three-month closing low in the previous session as investors snapped up stocks after the central bank held its key policy rates at record lows for the sixth straight month.
The main stock index ended 0.34 percent, or 23.91 points, firmer at 7,041.26, after closing at its lowest level since July 13 on Monday.
The Sri Lankan economy should grow 6.0-6.5 percent this year given strong credit growth after key policy rates have been held at record lows since April, Central Bank Governor Arjuna Mahendran said on Tuesday.
The central bank said in its monetary policy statement that private sector credit grew at a three-year high of 21.3 percent on year in August, up from 21 percent in July.
"Investors reacted positively to the central bank's policy rates decision," said Yohan Samarakkody, head of research at SC Securities (Pvt) Ltd.
"But investors will wait till the budget is announced as they need to know the economic policy."
Analysts said investors were cautious ahead of Prime Minister Ranil Wickremesinghe's policy statement early next month outlining the government's economic priorities ahead of 2016 budget announcement scheduled on Nov. 20.
The prime minister will deliver the policy statement on Nov. 5 or 6, said Finance Minister Ravi Karunanayake while speaking at a public forum late on Monday.
Analysts said a government move to implement a budget proposal of a retrospective tax targeting corporate is the main concern for investors.
Turnover stood at 969.6 million rupees ($6.90 million), lower than this year's daily average of 1.1 billion rupees.
Foreign investors were net sellers of 4.8 million rupees worth of shares on Tuesday, extending the year-to-date net foreign outflow to 2.91 billion rupees worth of equities.
Shares of Lanka ORIX Leasing Company Plc rose 1.07 percent, while Commercial Bank of Ceylon Plc gained 1.39 percent. ($1 = 140.5000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)