Foreigners buy more U.S. stocks, bonds

Foreigners increased their purchases of U.S. financial assets in October, when financial-market strains diminished as the Federal Reserve lowered interest rates.

Foreign holdings of equities and long-term debt rose a net $114 billion, after a $15.4-billion increase in September, the Treasury Department said Monday.

The increase came as investors abroad snapped up more Treasury securities than in any month in almost two years and bought the most U.S. stocks since May.

The October increase followed a slump in demand over the previous three months, when foreign investors sold an average of $11.8 billion a month. Demand may have slowed in November as equities posted their worst month in five years, analysts said.

“It will take a few more months of strong inflows to fully placate the doubters,” Mitul Kotecha, head of foreign exchange research in London at Calyon, a unit of Credit Agricole, said in a note to clients. “Deepening economic gloom and growing credit losses suggest a sustained bounce-back cannot be guaranteed.”

Including short-term securities such as Treasury bills and other financial assets, foreigners bought a net $97.8 billion, compared with sales of $32.8 billion a month before.

Foreign holdings of U.S. stocks rose $30.2 billion in October, compared with net purchases of $2.6 billion in September. The Standard & Poor’s 500 stock index rose 1.5% in October.