Japanese investors sell foreign stocks on caution over Fed comments, valuation concerns

(Reuters) -Japanese investors divested significant holdings in foreign stocks in the week to November 1, as they turned cautious amid hawkish remarks from some U.S. Federal Reserve officials and favoured locking in profits after the recent market rally.

Japanese investors liquidated a net 581.1 billion yen ($3.85 billion) worth of foreign stocks in their largest weekly sales since October 4, according to data from Japan's Ministry of Finance.

The U.S. central bank should not have cut interest rates in October and should not do so again in December, Dallas Fed President Lorie Logan said last week, citing a 'balanced' labor market and inflation level that looked likely to stay above policymakers' 2% goal for too long.

The MSCI World Index is set for its first weekly loss in four weeks, falling 1.6% so far.

Japanese investors also withdrew a net 354.4 billion yen from long-term foreign bonds, logging their fifth weekly net sales in six weeks. Additionally, they ditched short-term bills worth 798.7 billion yen.

Meanwhile, foreigners stayed net buyers in Japanese stocks for a fifth straight week to November 1, as they added roughly 690.1 billion yen worth of local shares.

The Nikkei 225 has, however, lost about 5% so far this week with technology shares facing a major loss.

Japanese long-term bonds drew about 280.6 billion yen worth of foreign inflows in the most recent week after two successive weekly outflows.

Foreigners also scooped up a net 1.83 trillion yen worth of Japanese short-term debt instruments.

($1 = 150.7800 yen)

(Reporting by Gaurav Dogra; Editing by Eileen Soreng)