* Investors sell 1.665 trln yen of foreign bonds last week
* Italian bond market slump triggered selling of foreign bonds
* But amount of Italian bonds sold seen to be limited
* Foreign bond selling seen centred on debt like US Treasuries (Adds details)
By Shinichi Saoshiro
TOKYO, June 7 (Reuters) - Japanese investors last week sold more foreign bonds than for any week since April 2017, thanks to political turmoil that caused Italian bonds to tumble and triggered volatility in global sovereign debt markets.
Data from the Ministry of Finance data on Thursday showed Japanese investors sold a net 1.665 trillion yen ($15.12 billion) of foreign bonds from May 27-June 2, the most for a week since early April 2017. of Italy potentially heading towards snap elections, seen as a de facto referendum on the country's position in the euro, shook Italian bonds last week and sent its 10-year government bond yield IT10YT=TWEB spiking to three-year highs.
The ministry data does not show the country of origin of the assets bought and sold by investors, but analysts believe that the amount of Italian bonds sold last week by Japanese investors was relatively small.
"Italy did end up triggering selling of bonds in the broader markets. But Japanese investors only hold a small amount of Italian bonds and the selling was centred more on other debt like Treasuries which saw their yields decline sharply," said Shuichi Ohsaki, fixed-income strategist at Merrill Lynch Japan Securities.
The 10-year Treasury note yield US10YT=RR , which in mid-May surged above 3 percent for the first time since 2014, had sunk to 2.759 percent at month's end as the euro zone turmoil fuelled demand for safe havens such as U.S. bonds and German bunds.
The German 10-year bund yield DE10YT=RR plunged to a 13-month low late in May.
"A number of investors were likely staring at losses on their Treasury holdings when the U.S. yield climbed to 3 percent, so the sudden drop in yields provided a chance to reverse some losses or even lock in profits," Ohsaki said.
He added that Japanese investors may not rush back into foreign bonds after their heavy selling amid concerns that European Central Bank could signal its desire to wind down massive stimulus as early as next week.
On Wednesday, ECB chief economist Peter Praet said the central bank is increasingly confident that inflation is rising back toward its target and next week will debate whether to gradually unwind bond purchases. = 110.1100 yen)
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