* Foreign investors sell C$1.2 bln of Canadian securities
* Canadian investment in foreign securities hits 16-month high
OTTAWA, May 16 (Reuters) - Foreign investors sold C$1.23 billion ($1.13 billion) worth of Canadian securities in March, the first divestment this year, while domestic purchases of overseas assets hit a 16-month high, Statistics Canada said on Friday.
Non-residents poured money into Canada in the wake of the recession, attracted by the country's relative economic stability, but their appetite for Canadian bonds, stocks and money market paper has dimmed as other markets recover.
Foreigners sold C$6.06 billion worth of money market paper, let by retirements. They also bought C$1.84 billion in bonds and C$2.99 billion of stocks in March, a month when Canadian stock prices closed at their highest levels since June 2008.
Canadian investors bought C$7.88 billion of foreign securities, the largest amount since November 2012. Investment in foreign shares hit C$6.42 billion, the highest since April 2007, and mainly targeted non-U.S. equities.
Canadians also bought C$1.81 billion worth of foreign bonds while selling C$0.34 billion in money market paper. Overall, the first quarter of 2014 saw a net outflow of funds from Canada of C$10.36 billion.
$1=$1.09 Canadian Reporting by David Ljunggren; Editing by Sofina Mirza-Reid