LONDON (Reuters) - British stocks, bonds and the pound are expected to enjoy more inflows in the coming quarters, BofA said on Wednesday, with the country’s net portfolio balance recording a 120-billion-pound inflows in the first quarter, the largest since 2008. BofA’s data crunching showed strong overseas demand for UK fixed income assets while domestic investors sold foreign equities, indicating increased investor appetite at home for UK assets. Britain’s current account deficit narrowed to 12.83 billion pounds ($17.8 billion) in the first quarter. BofA says the balance is distorted by Brexit aftershocks and impact on trade balance, but that the deficit should start to recede in the second-half of the year. Britain’s rapid COVID-19 vaccine rollout in the opening months of 2021 boosted the appetite from investors who had largely shunned UK stocks since the 2016 referendum, betting Britain will rebound more swiftly than its counterparts in Europe. As a result, international investors now hold the biggest British “overweight” - their UK share holdings relative to Britain’s size in global equity benchmarks - in seven years, BofA’s monthly survey of fund managers shows. Though some of that sheen around British assets has worn off on concerns that a resurgence of coronavirus cases in Britain and Europe might darken the prospects of a swift economic recovery in the coming months, investors broadly remain upbeat. “Our lead indicators suggest investor appetite for UK assets remains strong: the UK continues to attract strong cross-border M&A interest whilst the latest data on foreign gilt purchases shows ongoing demand,” the U.S. investment bank’s strategists said in a note on Wednesday. “Trend looks favourable over coming quarters which should help GBP,” BofA added. Sterling is on track for its fourth consecutive quarter of gains - the longest streak since 2017. Graphic: Uk deficit -