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UPDATE 1-U.S.-based stock funds attract $11 bln over week -Lipper

NEW YORK, Feb 20 (Reuters) - Investors in U.S.-based funds poured $11.2 billion into stock funds in the week ended Wednesday while pulling cash out of safe money market funds, data from Thomson Reuters' Lipper service showed on Thursday. The inflows into stock funds in the week ended Feb. 19 marked the biggest inflows into the funds in eight weeks. Money market funds, meanwhile, posted over $43 billion in outflows, marking their biggest outflows since October. "Investors are thinking that the worst stretch in the downturn of U.S. stocks is over," said Tom Roseen, head of research services at Lipper, referring to a drop in U.S. stocks in January on a rout in emerging market assets. The inflows into stock funds and outflows from money market funds, which typically invest in safe, short-term securities and are viewed as a place to park cash, showed investors' confidence that stocks could continue to head higher this year. Stock exchange-traded funds attracted $8.2 billion of the net inflows into stock funds, while stock mutual funds attracted $2.9 billion. ETFs are thought to represent the institutional investor, while mutual funds are commonly purchased by retail investors. The benchmark Standard & Poor's 500 stock index rose 0.5 percent over the weekly period. Stocks rose during most of the week after investors blamed weak U.S. retail sales and homebuilder confidence data on frigid temperatures. "People have been shrugging off weak U.S. economic data," Roseen said. U.S. markets were closed Monday for Presidents Day. The weekly gain in U.S. stocks came despite a downturn in stock markets on Wednesday after the minutes from a U.S. Federal Reserve meeting showed members supported continued tapering of the central bank's bond-buying program. Funds that hold emerging market stocks attracted $361 million in new cash, marking their first inflows in six weeks and underscoring investors' willingness to take greater risk. Investors showed some preference for safety by committing $3.3 billion in new cash to taxable bond funds, marking their seventh straight week of inflows. Bond investors reacted to the weak U.S. economic data while stock investors took it in stride, Roseen of Lipper said. Still, investors showed a preference for riskier bonds. Funds that hold high-yield junk bonds, which hold lower-quality credit ratings, attracted $804 million in new cash, while funds that mainly hold U.S. Treasuries posted outflows of $672 million. The weekly Lipper fund flow data is compiled from reports issued by U.S.-domiciled mutual funds and exchange-traded funds. The following is a broad breakdown of the flows for the week, including exchange-traded funds (in $ billions):

Sector Flow Chg % Assets Count ($Bil) Assets ($Bil) All Equity Funds 11.151 0.29 3,880.696 10,629 Domestic Equities 7.851 0.27 2,898.076 7,799 Non-Domestic Equities 3.300 0.34 982.620 2,830 All Taxable Bond Funds 3.345 0.20 1,691.493 5,323 All Money Market Funds -43.106 -1.81 2,337.829 1,319 All Municipal Bond 0.320 0.12 278.722 1,448

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