UPDATE 1-US net capital inflows for March at $23.2 billion

By Wanfeng Zhou

NEW YORK, May 15 (Reuters) - Net capital inflows into the United States were $23.2 billion in March, reversing a revised net outflow of $91.1 billion in the previous month, the Treasury Department said on Friday.

The department also said foreign demand for long-term securities, excluding swaps, rose to $55.8 billion from $22.0 billion in the previous month. Net foreign purchases of U.S. Treasury bonds and notes increased to $55.3 billion from $21.55 billion in February.

March's capital inflows were near the U.S. trade gap for the month of $27.6 billion.

Analysts said the data should alleviate fears of a collapse in foreign demand for U.S. securities.

"The TICs numbers are good and show a nice improvement from prior readings. It shows that money was returning into U.S. dollars despite yields being so low," said Kathy Lien, director of currency research at GFT Forex in New York.

"But it is not a surprise, given that risk aversion has supported a strong bid into U.S. assets until very recently."

China, the largest holder of U.S. Treasury securities, increased its holdings of government bonds further in March to $767.9 billion. In February, it held $744.2 billion.

Japan's Treasury holdings stood at $686.7 billion in March, compared with $661.9 billion in the prior month.

The dollar extended gains against the euro, which last traded down 0.5 percent at $1.3572 EUR=.

T.J. Marta of Marta On the Markets in New York, said while the data should assuage fears of a "complete collapse" in foreign demand for U.S. securities, "the pace of net buying will remain moderate in keeping with the downshift in global trade." (Reporting by Wanfeng Zhou and Vivianne Rodrigues; Editing by Chizu Nomiyama )