Foreigners divest Canadian securities in July

OTTAWA (Reuters) - Foreign investors reduced their holdings in Canadian securities in July for the first time since November 2007, dumping stocks and bonds for a net divestment of $5.59 billion, Statistics Canada said on Wednesday.

Canadian investors resumed their acquisitions of foreign stocks in the month, resulting in a net investment in foreign securities of $1.25 billion.

After accumulating equities for five straight months, foreigners sold off $2.75 billion of shares in July as falling commodity pries dragged down the Toronto Stock Exchange's main index by 6 percent.

Non-resident bond holdings decreased $3.69 billion mainly due to retirement of Canadian bonds denominated in non-U.S. foreign currencies. This followed "significant investment over the second quarter," Statscan said.

However, demand for short-term money market instruments strengthened in the month, with a net investment of $845 million.

Canadian investors scooped up foreign stocks after a major sell-off in June, buying $2.49 billion in July primarily in the U.S. market. But they shunned long-term debt instruments, selling $1.35 billion in bonds. Net acquisitions of foreign money market paper totaled $102 million.

(Reporting by Louise Egan; Editing by Frank McGurty)