Sri Lanka bourse up 1 pct after month-end settlement

 * Market up 1 pct; diversified, oil palm shares lead rise

* Investors buy large caps after month-end settlement

* Rupee down on importer dlr demand; cenbank raises band

COLOMBO, Aug 31 (Reuters) - Sri Lanka's benchmark share index rose on Tuesday led by diversified and oil palm shares as investors snapped them up after month-end settlements, traders said.

Sri Lanka's main share index .CSE rose 1.02 percent or 57.24 points to 5,658.01. It hit an all-time high of 5,679.14 on Aug. 20. Shares in market heavyweight and top conglomerate John Keells Holdings JKH.CM jumped 0.9 percent to 265.30 rupees.

The index is Asia's best performer with a 67.1 percent gain so far this year, although analysts have said the bourse is overheated with retail investors speculating heavily and ignoring fundamentals.

Turnover was at 2.9 billion rupees ($25.6 million), around five times the 2009 daily average. Foreign investors sold a net 68.9 million rupees' in shares and have overall sold a net 11.4 billion rupees so far this year.

The rupee LKR= closed at 112.77/79 a dollar, weaker from Monday's 112.68/70 on importer demand for dollars, while the central bank raised the dollar trading band by 10 cents to 112.40/80, dealers said.

FACTORS TO WATCH:

- Whether annual inflation picks up after data shows a rise following a five straight falls

- Tax reforms promised by the government

- Market reaction to proposed constitutional changes, seen to give more power to the country's president.

source - www.reuters.com/article