The pace of foreign investment in Canadian securities slowed in February. Meanwhile, Canadian investors’ holdings of foreign securities surged to its highest level since November 2002.

Foreign investors bought $1.8 billion in Canadian securities in February following purchases of $2.4 billion in January and $3.7 billion in December, Statistics Canada said today..

The purchases were all in stocks and foreign holdings of debt paper fell.

Canadian short-term interest rates increased in February by only 3 basis points to 2.46 per cent, while American short-term rates rose 21 basis points to 2.54 per cent. It was the first since December 2000 that the spread in short-term rates favoured investment in the United States.

Long-term rates rose in both countries in February, with Canadian rates hitting 4.28 per cent and U.S. rates rising to 4.27 per cent.

Canadian stock prices outperformed American markets in February.

After two consecutive months of decline, the Canadian dollar rose against the greenback in February. It ended the month at 81.07 US cents, an increase of half a cent.

Canadian investors bought $5.3 billion in foreign securities in February, the biggest jump since November 2002.

Foreigners, mainly Americans, bought $2,2 billion in Canadian stocks.

Transactions in Canadian bonds were relatively flat in February as foreign investors sold off $89 million worth, after buying $600 million the month before.