Foreigners buy fewer long-term U.S. Treasurys

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NEW YORK (Reuters) -- Foreign investors' purchases of long-term U.S. securities fell in April, the Treasury Department said on Monday, as they looked for better returns elsewhere.

Excluding swaps, international investors bought a net $11.2 billion in long-term U.S. securities in April, down from a revised $55.4 billion in the prior month.

Net long-term capital flows are a key gauge of foreign investor appetite because they exclude short-term transactions.

The report also showed a monthly net capital outflow from the United States of $53.2 billion in April, compared with a monthly inflow of $25.0 billion in March. In the same period, the U.S. trade gap widened to $29.2 billion.

Analysts said outflows from U.S. assets in April were consistent with an improvement in global risk appetite. In recent months, an aversion to higher-risk investments has boosted demand for assets denominated in U.S. dollars.

"The April (TICs) data tends to work with a theme that some of the funds that moved into U.S. dollars on the back of flight to 'quality' criteria exited as soon as times improved," Alan Ruskin, a chief international strategist at at RBS Global Banking and Markets, said in a note.

Demand for U.S. Treasury bonds and notes fell, the department said, with total net foreign purchases at $41.89 billion in April, down from $55.3 billion in March.

China, the largest holder of U.S. Treasury securities, decreased its holdings of government bonds in April to $763.5 billion. In March, it held $767.9 billion.

Japan's Treasury holdings stood at $685.9 billion in April, compared with $686.7 billion in March, and Russian holdings also fell slightly to $137.0 billion versus $138.4 billion.

The U.S. dollar held earlier gains versus the euro following the data, which last traded down about 1% at $1.3837.

Total net foreign purchases of U.S. equities plunged to $4.58 billion in April from $13.15 billion in March. Meanwhile, foreign investors sold $9.73 billion worth of U.S. corporate bonds in April, compared with purchases totaling $3.54 billion in March.