WELLINGTON (Reuters) - Banks transferred funds out of the United States and into Europe in the first three months of 2008 as they turned to safer assets amid the global credit crunch, the Bank for International Settlements said.

“In the first quarter of 2008, reporting banks continued their net transfer of funds out of the United States, a trend evident since the onset of the financial turmoil in mid-2007,” the Swiss-based BIS said in its quarterly review of financial markets and banking activity, published on Monday.

It said European banks had cut dollar loans booked by their U.S. offices, resulting in a net outflow from those offices of $259 billion during the first quarter of year, following a net outflow of $238 billion during the second half of 2007.

The BIS said banks stepped up their holdings in public sector debt, while their outstanding debt securities claims in the non-bank sector fell for the first time since 2001.

“This fall in debt securities claims seemed to coincide with a broader shift in bank balance sheets away from the U.S. non-bank private sector, at least for some banking systems,” it said.