March 7 (Reuters) - U.S. municipal bond funds ended two months of uninterrupted weekly gains as investors turned their attention and assets to America's stock market rally.
Lipper said on Thursday that municipal funds posted $96.9 million of net outflows in the week ended March 6, compared with $323.8 million of inflows in the previous week.
The four-week moving average for mutual funds specializing in tax-free debt sold by states and local governments remained positive at $252.3 million of net inflows, according to data from Lipper, a unit of Thomson Reuters.
The last time muni funds had posted net outflows was the week ended Jan. 2, when net outflows were $6.8 million. In 2012, the funds posted long stretches of net inflows, with just a handful of weekly net outflows, according to Lipper.
"Of course stocks have something to do with the outflows, but with flows being positive for so long, you're going to have some weeks of outflows," said John Mousseau, portfolio manager at Cumberland Advisors.
"I'm not worried. We know the Federal Reserve will keep rates low, we know inflation is low. And you've got all those Baby Boomers who'll be buying when yields are high."
As the Dow Jones industrial average hit record highs this week, investors also stepped back from high-yield muni funds, with Lipper reporting net outflows of $1.3 million, compared with $69.9 million of inflows the week before.
Flows into exchange-traded funds bucked the trend. Net inflows rose to $14.6 million from $11.9 million of net inflows the previous week.
Retail investors bought 1.7 bonds for every one they sold in the week ended March 6, the same pace as during the previous week, according to BondDesk Group.
The number of bonds bought totaled 62,199, while the number of bonds sold was 36,831.
On Thursday U.S. stocks closed higher, with the Dow setting a record high a third straight day.
Lipper also reported that investors poured $5.67 billion in new cash into U.S.-based stock funds in the latest week, the largest in four weeks.