(Corrects return on FTSEurofirst 300 index to 0.84 percent, not 0.54 percent, in 7th paragraph; corrects to benchmark Treasuries' yield, not prices, fell in 9th paragraph)
By Sam Forgione
NEW YORK Jan 23 Investors in funds based in the United States poured $4 billion into stock mutual funds in the week ended Jan. 22 on optimism that stocks would rally further, data from Thomson Reuters' Lipper service showed on Thursday.
The inflows marked the fifth straight week of new cash into the funds. Stock exchange-traded funds had their third straight week of outflows of about $250 million.
Mutual funds are thought to represent the retail investor, while ETFs are thought to represent the institutional investor.
"Investors believe that there is some upward potential left," said Tom Roseen, head of research services at Lipper, on the inflows into stock mutual funds. The benchmark Standard & Poor's 500 stock index rallied nearly 30 percent last year.
The inflows came even as the S&P 500 fell a modest 0.2 percent over the holiday-shortened week on some disappointing corporate earnings.
European stock funds attracted $1.3 billion in new money, marking the biggest weekly inflows into the funds since Lipper records began in 1992. European shares extended their new year rally over the period and hit 5-1/2-year highs on Jan. 21.
The FTSEurofirst 300 of top European shares rose 0.84 percent for the week. The index hit its highs after a move by China to inject money into financial markets eased concerns about a credit crunch that could hamper growth, and on some strong earnings results.
Investors also poured cash into bond funds. Taxable bond funds attracted $3.1 billion in new cash, marking their third straight week of inflows. Funds that mainly hold U.S. Treasuries attracted $47 million in new cash, marking their first inflows since last November.
The yield on 10-year U.S. Treasury notes fell a modest 2 basis points to 2.86 percent throughout the week after economic data on U.S. housing starts in December, industrial output, and inflation came in as expected.
Funds that hold corporate investment-grade bonds raked in $1.75 billion, marking the 12th straight week of new cash into the funds. Inflation-protected bond funds attracted a meager $21 million, still marking the first new demand for the funds since April of last year.
Low-risk money market funds, which typically invest in short-term securities, attracted $12.3 billion in new cash after investors pulled $15.6 billion from the funds the previous week.
Commodities and precious metals funds, which mainly invest in gold futures, attracted $335 million, marking their first inflows since last September. The inflows came even as the price of spot gold slipped about 1 percent on Jan. 21, the most since the year began.
"People may have seen some buying opportunities after gold and natural resources took a beating last year," said Roseen. (Reporting by Sam Forgione; Editing by Chizu Nomiyama)