(Recasts, adds details, BondDesk data)
March 22 (Reuters) - Net inflows into U.S. municipal bond funds fell to $88.5 million in the week ended March 21, an 87 percent drop from $698 million of inflows in the previous week, according to data released by Lipper on Thursday.
While flows have been positive for 16 straight weeks, inflows have fallen sharply since hitting a more than two-year weekly high of $1.2 billion in the week ended March 7.
The latest $88.5 million inflow was the lowest since the week of Oct 12, 2011, according to Lipper data.
The four-week moving average was positive at $586 million, said Lipper, a unit of Thomson Reuters.
Flows into high-yield muni funds turned negative after 10 consecutive weeks of inflows. Net outflows totaled $8.6 million versus $184.6 million of net inflows in the week ended March 14.
In contrast, flows into exchange-traded muni funds were relatively steady, ebbing to $44.6 million of net inflows in the latest week from $57.5 million in the previous week, Lipper reported. On Thursday, BondDesk Group data for the week ended March 21 showed retail investors bought 2.3 bonds for each one they sold, the same buy/sell ratio as in the previous week. The total number of bonds bought was 67,092, while the number of bonds sold was 29,665. The data is based on odd-lot customer transactions of under 100 bonds. (Reporting by Karen Pierog, additional reporting by Lisa Lambert in Washington; Editing by Andrew Hay)