July 16, 2015 / 8:55 PM / 3 years ago

UPDATE 1-Foreign inflows into U.S. Treasuries in May largest in more than a year

(Adds details on breakdown of capital flows)

NEW YORK, July 16 (Reuters) - Foreign inflows into U.S. Treasuries in May rose to their highest level in more than a year, data from the U.S. Treasury Department showed on Thursday, as concerns about Greece and the Chinese stock market spurred a flight to safe assets.

Offshore purchases of U.S. Treasuries totaled $53.4 billion in May, the largest since February 2014. Foreign investors bought U.S. government debt for a third straight month.

Benchmark U.S. Treasuries ended May with a yield of 2.0950 percent, slightly higher than 2.0490 percent at the beginning of the month.

Greece’s debt troubles started percolating again in May, culminating in a historic “No” vote in early July for another bailout deal that would entail more austerity for Greeks. It was also toward the latter part of May that the Chinese stock market started losing value. Both events underpinned safe-haven assets such as U.S. Treasuries and German bonds, and weighed on riskier assets such as equities.

Overall, data showed foreign investors bought long-term U.S. securities for a fourth consecutive month in May.

Net buying of long-term U.S. assets totaled $93 billion in May from a revised inflow of $54.4 billion in April. Including short-dated assets such as bills, overseas investors bought $115 billion in May compared with $107.9 billion the previous month.

Meanwhile, China’s holdings of U.S. Treasuries increased for a third straight month in May. China is still the largest holder of U.S. government debt.

China held $1.270 trillion in U.S. Treasuries in May, compared with $1.263 trillion in April. Its holdings peaked at $1.317 trillion in November 2013.

Japan had the second-largest holdings of U.S. Treasuries, with $1.214 trillion, down slightly from $1.215 trillion in April.

Belgium, the third-largest holder of U.S. debt as recently as February, further pared its holdings in May to $202.8 billion from $228.9 billion in April. Belgium’s holdings in May were the lowest since November 2013, when they were $200.6 billion.

The euro zone country’s holdings of U.S. Treasuries peaked at a record $381.4 billion in March 2014, but have since dropped more than 40 percent, the data showed.

Analysts have said Belgium’s holdings had risen due to foreign accumulation of Treasuries held in custody accounts at Belgium-based clearing houses.

U.S. equities, meanwhile, posted an outflow of $14 billion in May, from an inflow of $675 million in April. Private investors sold $14.470 billion in U.S. stocks. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu Nomiyama and Matthew Lewis)

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