OTTAWA, Feb 19 (Reuters) - Foreign investors reduced their holdings of Canadian securities in December by C$1.9 billion ($1.9 billion), led by the biggest divestment of shares since November 2007 due to cross-border mergers and acquisitions, Statistics Canada said on Tuesday.

In November, foreigners had added C$5.5 billion in Canadian securities to their portfolios, revised from C$5.6 billion previously.

Nonresidents unloaded C$6.7 billion worth of equities in December as portfolio investors 'rendered their Canadian shares to foreign direct investors,' Statscan said.

Foreign holdings of Canadian bonds also fell. The C$655 million decline, the first reduction in six months, stemmed from large retirements and coupon payments.

They added C$4.8 billion in debt securities, focused mainly on money market instruments and federal government paper.

In 2012 as a whole, foreigners bought C$83.2 billion in Canadian securities, down from C$97.3 billion in 2011.

Canadian investors, for their part, added C$5.5 billion of foreign securities to their portfolios in December. U.S. government bonds accounted for C$3.2 billion of the total $3.8 billion outflow into foreign bonds in the month.

Canadians also boosted their holdings of foreign equities to C$2.5 billion while reducing money market instruments.

Canadian investment in securities abroad almost doubled in 2012 to C$35.1 billion from C$18.3 billion in the previous year.

($1=$1.01 Canadian)

(Reporting by Louise Egan and Alex Paterson) Keywords: CANADA ECONOMY/SECURITIES

(louise.egan@thomsonreuters.com)(+1 - 613 - 235 - 6745)(Reuters Messaging: louise.egan.reuters.net@reuters.com)

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