World Still In Love With US

Oct. 17 (Bloomberg) -- International investment in U.S. securities surged to a record $116.8 billion in August as foreigners stepped up their buying of Treasury debt.

The increase compares with July's $32.9 billion, which was the lowest since May 2005, the Treasury Department said today in Washington. The figure exceeds the $56.5 billion median estimate of 14 analysts surveyed by Bloomberg News.

Demand for U.S. assets jumped in August as the Federal Reserve ended two years of interest-rate increases and reports showed a combination of easing inflation and greater consumer spending. More than a month later, that faith in the U.S. is holding, helping drive the Dow Jones Industrial average to a record high yesterday.

"There's no evidence confidence in the U.S. is weakening," Steven Pearson, chief currency strategist at HBOS Plc, Britain's biggest mortgage lender, said from London. "This number is very strong. It gives you an idea why the dollar has held up."

International purchases of U.S. securities previously peaked at $102.6 billion in October 2005 and averaged $71.6 billion over the 12 months through July. The average over the previous five years was $57.8 billion.

China, Japan, the U.K. and major oil exporters increased their holdings of U.S. government debt.

Japan, the largest holder of U.S. Treasury securities, raised its holdings by $7.6 billion to $644.2 billion. China, the second-largest holder, raised holdings by $8.7 billion to $339 billion.