Bargain hunters put cash in western Europe, Japan-EPFR

NEW YORK Feb 4 (Reuters) - Investors hunted for bargains amid the market turmoil, pulling money off the sidelines in the week ended Feb. 3 and putting it to work in U.S. and global debt funds as well as beaten-up equities from western Europe and Japan, EPFR Global said on Thursday.

The latest report showed a $9.1 billion net outflow of cash from money market mutual funds, the Boston-based fund tracker said in a statement.

This comes even as uncertainty over the strength of the global economic recovery increases and a rising tide of worry over government finances in Greece, Portugal, Spain, Italy and Ireland.

Investors have pulled nearly $80 billion out of money market funds, considered safe havens for investors unsure of where to place their bets.

Dedicated long-only emerging market equity funds had their worst week in 24, seeing investors pull a net $1.62 billion out of the sector, a second consecutive week of redemptions.

"Overall, bond funds tracked weekly by EPFR Global with $1.1 trillion in assets attracted another $4.6 billion of net inflows while the equity funds, with $3.1 trillion in assets, suffered outflows of $981 million," EPFR's statement said.

BARGAIN HUNTING

The bargain hunting was seen especially strong in western Europe where investors pumped in a net $861 million, with Britain taking the lion's share with a net inflow of $587 billion.

After hitting a 16 month high on Jan. 19, the pan-European FTSEurofirst 300 index .FTEU3 of top shares fell 5.22 percent through the prior EPFR reporting period ended Jan. 27. The index recovered 0.71 percent in the week ended Feb. 3.

Over the same dates, Britain's benchmark FTSE 100 index .FTSE lost 5.37 percent, recovering 0.63 percent through EPFR's latest reporting period.

A similar pattern was seen in Japan-focused funds, which in the latest week took in a net $165.6 million. The Nikkei-225 index .N225 gained 1.7 percent during that period.

Japanese funds extended their inflow streak to six weeks "as investors shrugged off Toyota's massive recalls, signs that deflation is strengthening its grip on Japan's domestic economy and fresh warnings from ratings agencies about the unchecked growth of the country's public debt," EPFR said.

Asia ex-Japan equity funds had net outflows of $516.5 million.

EPFR said the pressure on this group was compounded by the diplomatic row over the U.S. arms sale to Taiwan, which raised the specter of trade disputes and sanctions with China.

China equity funds posted outflows for the fifth time in the past six weeks, losing $162.7 million, but Taiwan equity funds had their best week since early June.

India's equity funds had $180.4 million in net withdrawals, its worst week in the last 68 weeks.

U.S. equity funds had net outflows of $305.2 million and Latin America had $175.7 million in redemptions.

SECTOR FUNDS

Financial sector funds took in a net $423.8 million despite proposals to increase both taxes and regulations on U.S. banks.

It appears the expected delays and changes to an overhaul of the U.S. healthcare system benefited this sector, which took in a net $239 million in the latest week.

Investors kept nibbling at real estate, pumping a net $179.5 million into this area, replacing the energy sector funds group as the year-to-date inflow leader. Energy funds had net redemptions of $164.2 million.

Technology and consumer goods sector funds each had inflows over $130 million.

DEBT

The mixed performance for equity funds and the search for safety did lead cash to bond funds. U.S. bond funds took in a net $2.25 billion, extending the inflow streak to 57 weeks.

Global bonds funds took in $1.6 billion. High-yield bond funds benefited from central banks holding interest rates steady, receiving a net inflow of $335 million.

Emerging market bond funds took in $406 million in fresh cash with local currency beating hard-currency nearly 2:1. (Editing by Gary Hill)