By Sam Forgione NEW YORK, July 3 (Reuters) - Investors in mutual funds based in the United States pulled $28.1 billion out of bond funds in the latest week as interest rates rose on fears the U.S. Federal Reserve could cut its bond-buying later this year, data from the Investment Company Institute showed on Wednesday. The outflows from bond mutual funds in the week ended June 26 were the most since weekly records began in January 2007, said ICI, a U.S. mutual fund trade organization. Municipal bond funds also suffered record outflows of $7.68 billion over the week. Investors have pulled cash out of bond funds as increasing interest rates have made fixed-income securities vulnerable to price losses. The yield on the benchmark 10-year U.S. Treasury note rose 81 basis points between the start of May and the end of June to 2.49 percent. As yields rise, prices fall. The Treasury market has come under severe selling pressure as fears lingered that the Fed might reduce its $85 billion in monthly purchases of Treasuries and agency mortgage securities later this year. Fed Chairman Ben Bernanke reiterated on June 19 that the central bank could reduce its purchases later this year and end them altogether by mid-2014 if the economy looked strong enough. The latest outflows from bond funds also marked a big leap from outflows of $7.97 billion the prior week. Bond funds suffered four consecutive weeks of outflows in June totaling roughly $60.5 billion in assets. The outflows from bond mutual funds over the entirety of June, meanwhile, amount to slightly less than 2 percent of total assets, according to an unreleased estimate from ICI. Those outflows did not come as a shock given the degree to which interest rates have risen over the past two months, according to a statement from Brian Reid, chief economist at ICI. "This is about what we would have expected with the kind of interest rate increases we have seen during the past two months," Reid said on the outflows from bond mutual funds in June. He added that the latest week's record outflows were "not surprising." Stock mutual funds gained meager inflows of $169 million over the week, down from inflows of $1.98 billion the prior week. The benchmark S&P 500 stock index fell 1.6 percent over the reporting period as volatility increased on fears of a reduction in the Fed's accommodative monetary policy. Inflows of $1.13 billion into funds that hold non-U.S. stocks accounted for the overall inflows into stock funds. Those cash gains were down, however, from inflows of $2.44 billion into the funds the prior week. Funds that hold only U.S. stocks had outflows of $962 million over the week, marking the sixth straight week of outflows from the funds. Those outflows were more than double those of the prior week, when investors pulled $457 million out of the funds. Hybrid funds, which can invest in both stocks and fixed income securities, suffered outflows of $591 million. That marked the first week of outflows from the funds over any full week this year, according to ICI data. The following is a breakdown of estimated ICI flows for the past five weeks (all figures in millions of dollars): 5/29/13 6/5/13 6/12/13 6/19/2013 6/26/2013 Total Equity -999 -932 -1,032 1,980 169 Domestic -1,712 -2,522 -2,285 -457 -962 World 713 1,590 1,253 2,437 1,132 Hybrid* 1,127 347 1,147 679 -591 Total Bond 1,360 -10,910 -13,468 -7,972 -28,122 Taxable 1,576 -8,655 -10,232 -4,604 -20,446 Municipal -216 -2,256 -3,236 -3,368 -7,676 Total 1,488 -11,495 -13,353 -5,313 -28,543 * Hybrid funds can invest in stocks and/or fixed-income securities.