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Japan edges out China as largest holder of U.S. Treasuries

NEW YORK (Reuters) - U.S. Treasury Department data on Wednesday showed Japan edged out China in February as the largest holder of U.S. Treasuries, a month in which foreign investors sold U.S. government debt for a fourth straight month.

Data showed outflows from U.S. Treasuries totalled $6.30 billion (4 billion pounds) in the month, down from net selling of $55.1 billion January, which had been the highest in at least three years.

Japan eclipsed China as the largest Treasury holder for the first time since August 2008. Japan's holdings actually declined in February, to $1.224 trillion, from $1.238 trillion the previous month, while China's also fell, to $1.223 trillion from $1.239 trillion.

Foreign central banks sold $11.1 billion in Treasuries in February, shedding U.S. government debt for a fifth straight month.

The data was in line with market movements in the Treasury market, which showed investors sold Treasuries in February as yields on the long end rose. Benchmark 10-year U.S. yields in February ranged between 1.6530 percent at the beginning of the month to 2.00 percent at the end.

Overall, net buying of long-term U.S. assets totalled $9.8 billion in February after an outflow of $27.4 billion in January. Including short-dated assets such as bills, overseas investors bought a net $4.1 billion in February after a revised inflow of $51 billion the month before.

The February report showed net inflows into U.S. equities of $759 million after foreign purchases of $597 million in January. Foreigners bought U.S. stocks for a fourth consecutive month.

Investors bought U.S. corporate bonds for a sixth straight month in February. Net inflows totalled $9.4 billion in February from $5.7 billion in January.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by James Dalgleish)