NEW YORK (Reuters) - Investors pulled $1.8 billion out of stock funds worldwide in the latest week on uncertainty over the U.S. Federal Reserve's next move, data from a Bank of America Merrill Lynch Global Research report showed on Friday.
The outflows from stock funds in the week ended November 6 reversed big inflows over the previous three weeks. In the prior week, investors poured $12.4 billion into the funds.
Strong U.S. data on manufacturing and Midwest business activity over the week stoked fears that the Fed could begin scaling back its $85 billion in monthly bond-buying at its December meeting rather than in early 2014.
The Fed's bond-buying has kept interest rates low and driven investors into riskier assets such as stocks, fueling a 24 percent rise in the Standard & Poor's 500 index this year and record inflows of $228.8 billion into stock funds.
Overall, investors showed an aversion to risk and profit-taking in the latest week by pulling cash out of stock funds and committing money to safer bond and money market funds, according to the data, which also cited figures from fund-tracker EPFR Global.
Funds that hold U.S. stocks had outflows of $7.5 billion, with the majority of withdrawals leaving exchange-traded funds, including the SPDR S&P 500 ETF Trust(PSE:SPY - News). The ETF had outflows despite a 0.4 percent rise in the S&P 500 over the weekly period.
Emerging market stock funds had outflows of $1 billion over the weekly period, their largest outflows in five weeks. Emerging market assets have benefited from the Fed's bond-buying.
European stock funds, meanwhile, had inflows of $2.8 billion, marking their 19th straight week of new cash and their longest inflow streak on record.
The FTSEurofirst 300 index of top European shares rose 0.7 percent over the week, despite uncertainty over the European Central Bank's policy move at its Thursday meeting. The ECB cut interest rates to a record low on Thursday after to prevent the euro zone's recovery from stalling.
Bond funds attracted $1.7 billion in new cash, marking their biggest inflows in six weeks. Investment-grade bond funds reaped $1.5 billion in new cash, their largest inflows since May according to the report.
Funds that hold government debt, mainly U.S. Treasuries, attracted $900 million over the latest weekly period, marking their first inflows in nine weeks and showing investors' preference for safety.
The inflows into funds that hold Treasuries came even as the yield on the benchmark 10-year U.S. Treasury note rose about 10 basis points to 2.64 percent by the end of the weekly period on speculation that the Fed could soon pull back its stimulus.
Precious metals funds had outflows of $200 million over the weekly period, marking their 8th straight week of withdrawals. Spot gold slumped 1.4 percent on October 31, the most in three weeks on concerns surrounding the Fed's path.
(Reporting by Sam Forgione; Editing by James Dalgleish and Krista Hughes)
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