Foreign investors sell Japanese stocks for third week amid BOJ policy speculation

Dec 14 (Reuters) - Japanese stocks witnessed foreign outflows for the third consecutive week in the seven days leading up to Dec. 8 on speculations about the potential end of the Bank of Japan's (BOJ) decade-long stimulus measures ahead of the central bank's policy meeting next week.

Data from Japanese exchanges revealed that non-native investors withdrew a 71.46 billion yen ($504.7 million) from Japanese stocks last week, marking the smallest amount in three weeks on a net basis.

They offloaded 586.87 billion yen in cash equity, the largest amount since Sept. 22, while purchasing about 520.91 billion yen worth of derivatives.

Concerns about the BOJ potentially reversing its ultra-low interest rate policy were stoked by Governor Kazuo Ueda's recent remarks about exploring options to target rates after withdrawing short-term borrowing costs from negative territory.

However, a Bloomberg report on Monday suggested that BOJ officials do not see an immediate need to abandon negative interest rates this month, citing a lack of compelling evidence of strong wage growth to support sustainable inflation, according to sources.

The Nikkei fell 3.36% last week, marking its sharpest weekly drop since Sept. 22, while the broader Topix index declined by about 2.44%.

Still, foreigners have made net investments of about 6.09 trillion yen in Japanese stocks this year, in contrast to a sale of about 2.8 trillion yen during the same period last year.

In the bond market, foreign demand for short-term Japanese papers remained strong, with a net inflow of 1.64 trillion yen last week, following 3.83 trillion yen in purchases the week before.

Conversely, Japanese investors withdrew roughly 500.8 billion yen from foreign equities, marking the third consecutive week of net selling.

They also sold 1.08 trillion yen in long-term overseas bonds on a net basis but acquired about 169.8 billion yen in short-term foreign debt securities. ($1 = 141.5900 yen)

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru;Editing by Dhanya Ann Thoppil)