UPDATE 1-Offshore buyers lift China bond holdings for 9th month in November

* Offshore institutions increase Chinese bond holdings by 14.4bn yuan in November

* High yields draw investors to government and policy bank bonds

* NCD holdings fall as maturities hit (Adds data from Shanghai Clearing House, context and comment on NCDs)

SHANGHAI, Dec 8 (Reuters) - Foreign investors increased their holdings of Chinese bonds for a ninth consecutive month in November, adding to positions in government bonds and some policy-bank bonds as a domestic sell-off led to a surge in yields.

Holdings of Chinese treasury bonds by overseas investors rose 14.4 billion yuan in October to 573.5 billion yuan ($86.66 billion), according to Reuters' calculations based on data from the China Central Depository and Clearing Co (CCDC), the country's primary clearing house.

After reducing them in October, offshore investors increased their holdings of Chinese policy bank bonds by 1.84 billion yuan to 316.4 billion yuan. Total offshore holdings of all Chinese bonds cleared by CCDC rose by 15.3 billion yuan in November to 936.6 billion yuan.

Following a surge since August, holdings by offshore institutions of negotiable certificates of deposit (NCD), a type of short-term debt popular among smaller banks, fell by 15.7 billion yuan in November to 139 billion yuan, separate data released by Shanghai Clearing House showed.

Gary Ng, an economist at Natixis in Hong Kong, said the decline might reflect a maturity wall as NCDs come due. But he added that high yields would continue to make them attractive to investors.

Data from the website of the China Foreign Exchange Trade System (CFETS) showed more than 2.2 trillion yuan in NCDs will come due in December, about 6 percent of the total value of all NCDs ever issued.

The yield on three-month AAA-rated NCDs was 4.9802 percent on Friday.

Fears over the impact of a government campaign to reduce excessive financial risk drove yields on Chinese government and policy-bank bonds to their highest levels in three years in November, lifting yields across the domestic bond market.

On Friday, the yield on 10-year Chinese government bonds was 3.916 percent - down from a peak of 4.03 percent on Nov. 23, but up 28.4 basis points from the end of September

"The market has already calmed down ... we have always seen that whenever the five-year or the 10-year yields approach 4 percent, it seems to become quite attractive for some long-term investors," said Frances Cheung, head of Asia Macro Strategy at Westpac.

Total offshore holdings of bonds in China's interbank market rose 1.6 billion yuan in November to 1.1 trillion yuan, representing a 43 percent rise since January.($1 = 6.6180 Chinese yuan) (Reporting by Andrew Galbraith; Editing by Sam Holmes)