Foreigners stepped up selling in Japanese shares last week, as concerns over inflation and expectations of a tighter U.S. monetary policy, dented risk appetite.

Stocks worth 582.91 billion yen ($5.08 billion) were offloaded by cross-border investors in the week to Jan. 21, the most since Dec. 3, data from Japanese exchanges showed.

Investors sold a net 304.63 billion yen in cash equity markets and a net 278.28 billion yen worth of derivatives.

Outsiders also sold Japanese bonds of 1.95 trillion yen last week after three straight weeks of net buying, finance ministry data showed.

Amid inflationary fears last week, investors sold growth stocks including Japanese tech heavyweights, in anticipation of the U.S. Federal Reserve's hawkish stance on monetary policy, ahead if its meeting earlier this week.

Sony Group lost 8.8% last week as gaming rival Microsoft  said that it will buy developer Activision Blizzard  , while Toyota Motor 7203.T dropped 4.4% on concerns over operational impact from rising COVID-19 infections and chip shortages.

The Topix index  dropped 2.6% last week, while the Nikkei share average  shed 2.1%, marking a third straight week of decline.

The Nikkei hit a 14-month low on Thursday, dragged down by technology heavyweights, as investors were concerned about the outlook for U.S. borrowing costs after the Fed signaled that it is likely to raise U.S. interest rates in March.

Japanese investors sold overseas bonds worth a net 267 billion yen last week. They also sold cross-border equities of 86.5 billion, which marked a third straight week of net selling.

($1 = 114.7100 yen)

 (Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Rashmi Aich)