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U.S. fund investors pull back from 'Trump trade'

(Adds details on mutual funds and ETFs, analyst quotes, table, byline) By Trevor Hunnicutt NEW YORK, March 23 (Reuters) - Investors eased off from "Trump trade" bets during the latest week, snatching the most money from bank sector funds in more than a year and stockpiling bonds, Lipper data for U.S.-based funds showed on Thursday.

U.S.-based taxable bond funds absorbed $8.3 billion in cash during the week ended March 22, the most in eight months, while investors withdrew $1.3 billion from financial sector funds in the worst week of net sales for those funds since July 2015, Lipper said.

In both cases, the latest week's results are an about-face from the popular trades that followed U.S. President Donald Trump's election victory in November and come as investors questioned whether the new U.S. administration can soon deliver the fiscal and regulatory changes needed to support the "Trump trade" of higher equity prices and rising bond yields.

Trump on Thursday failed to close the deal with lawmakers on how to dismantle Obamacare, forcing the House of Representatives to delay a vote on a healthcare bill that was supposed to be his first legislative win.

"As investors have become more skeptical or wary of the ability of the president to drive through his policy agenda that's started to have negative impact on some of the areas in the U.S. which had benefited from that hope," said Richard Turnill, BlackRock Inc's global chief investment strategist.

Banks were set to prosper under an administration pushing infrastructure spending along with cuts to taxes and regulation.

A hawkish response by the U.S. Federal Reserve was expected to keep interest rates rising, boosting bank earnings but keeping Treasuries under severe selling pressure.

The bearish-bond and bullish-bank trades have both diminished since November, and on Tuesday investors delivered a body blow to U.S. stocks and fled to safe-haven bonds. The S&P 500 and Dow Jones Industrial Average indexes lost over 1 percent that day in their worst one-day performances since before Trump's election victory.

Overall, stock funds posted $1 billion in net withdrawals, the first week of outflows since January. Despite that, equity funds invested abroad attracted $3.8 billion in the largest haul since December 2015.

Emerging markets stock funds attracted $2.2 billion in their best week since August 2016, while European stock funds gathered $636 million in their best week since December 2015. Japanese stock funds posted $593 million in withdrawals, their largest outflows since last July, according to Lipper.

Turnill said some international markets have grown more attractive given the uncertainty around U.S. stocks and their relatively high prices.

High-yield bond funds stanched their bleeding after three weeks of outflows, attracting $736 million during the latest week, the research service said.

The following is a broad breakdown of the flows for the week, including mutual funds and exchange-traded funds: Sector Flow Chg % Assets Assets Count ($blns) ($blns) All Equity Funds -1.023 -0.02 5,728.277 11,744 Domestic Equities -4.843 -0.12 4,071.302 8,388 Non-Domestic Equities 3.820 0.23 1,656.975 3,356 All Taxable Bond Funds 8.268 0.35 2,351.811 5,926 All Money Market Funds -17.233 -0.74 2,305.904 1,036 All Municipal Bond Funds 0.173 0.05 372.067 1,409 (Reporting by Trevor Hunnicutt; Editing by Jennifer Ablan and Lisa Shumaker)