April 9 (Reuters) - Japanese stocks witnessed a huge influx of foreign funds in the week through April 4, a turnaround from three successive weeks of selling, with investor sentiment stabilizing ahead of a ceasefire in the Iran war.

Foreigners invested a net 2.96 trillion yen ($18.65 billion) into Japanese stocks in the week, reversing nearly two-thirds of the 4.45 trillion yen withdrawals the prior week, data from Japan's Ministry of Finance showed on Thursday.

The Nikkei rallied roughly 5.39% on Wednesday as the U.S. and Iran reached a ceasefire deal the day before.

Seasonal factors also contributed to foreign inflows in the last week.

Foreign financial institutions often shift their holdings from Tokyo to offshore entities in March, before the voting rights and dividend entitlements are fixed, and then move them back in April, said Tomochika Kitaoka, the chief equity strategist for Japan at Nomura.

Foreigners had shed nearly 7.37 trillion yen worth of Japanese stocks in March.

A surge in benchmark Japanese government bond yields to a near three-decade high also helped attract 2.46 trillion yen in foreign inflows into local long-term bonds last week.

Japanese investors, meanwhile, pumped roughly 1.44 trillion yen - the largest amount in 11 months - into foreign stocks in the period.

They, however, divested foreign long-term bonds by a net 2.46 trillion yen, as they remained net sellers for a fourth successive week.

($1 = 158.7000 yen)