European stock funds in U.S. attract near-record cash: Lipper

NEW YORK (Reuters) - Investors stampeded into U.S.-based stock funds that invest in Europe, plowing the second-largest amount on record into those products and the most in two years, Lipper data showed on Thursday.

European stock funds in the United States collected $1.7 billion in the week ended Wednesday, the data showed, following the victory on Sunday of European centrist Emmanuel Macron over eurosceptic Marine Le Pen in the French presidential runoff.

The cash flows into the Europe funds are the biggest since the category's largest week ever in February 2015, when fears of a Greek exit from the European Union were ebbing and markets gorged on monetary policy stimulus, according to the research service's records that date back to 1992.

"There was a sigh of relief," said Tom Roseen, head of research services at Thomson Reuters Lipper, despite the fact that the result was widely predicted.

"There are buying opportunities in Europe."

DoubleLine Capital LP chief Jeffrey Gundlach on Wednesday told Reuters that volatility in stock markets is "insanely low" and that European and emerging markets equities are more attractive than U.S. equities.

The pan-European STOXX 600 index has returned 11 percent since the end of 2016, while the S&P 500 has added 7.7 percent in that period. The figures include dividends.

Flow figures for U.S.-based domestic stock funds corroborated the shift to overseas equities. Investors pulled$4.6 billion from funds focused on domestic shares, and added$2.5 billion in cash to equity funds primarily invested abroad.

The largest inflows went to iShares MSCI EAFE ETF, which invests in developed markets outside the United States, and pulled in an estimated $1.1 billion. The iShares MSCI Eurozone ETF gathered $933 million.

But investors yanked $2.5 billion from SPDR S&P 500 ETF and $1.2 billion from iShares Russell 2000 ETF. Both invest broadly in U.S. stocks.

U.S.-based taxable bond funds reeled in $2.2 billion in their eighth straight week of inflows, but riskier high-yield bond funds posted $1.7 billion in withdrawals, the largest weekly outflow figure in about two months.

Emerging market stock funds in the United States posted their first weekly outflow of the year, with $305 million in withdrawals. Technology sector stock funds attracted $557 million in their second biggest week of inflows in 2017.

The iPath S&P 500 VIX Short-Term Futures ETN, designed to reflect traders' projections of stock market volatility, attracted its biggest cash inflow since late October 2016, Lipper data showed. The CBOE Volatility Index, a measure of implied volatility known as the "fear gauge" for U.S. stocks, fell earlier this week to its lowest close since 1993.

(Reporting by Trevor Hunnicutt; Editing by Jennifer Ablan and Diane Craft)