Global slowdown to trim emerging capital flows-IIF

RIO DE JANEIRO, March 6 (Reuters) - Private capital flows to emerging markets in 2008 should edge lower after reaching a record high last year as economies around the world slow, the top international banking lobby group said on Thursday.

The Institute of International Finance, the largest lobby for 375 of the world's major banks and investment institutions, said net flows should reach $731 billion this year, 6.5 percent less than in 2007, but still a strong level.

"Even with a slowing global economy, the scale of capital likely to flow to emerging markets in 2008 is formidable," Josef Ackermann, chairman of the IIF and also of German bank Deutsche Bank (DBKGn.DE: Quote, Profile, Research, Stock Buzz), said at a news conference.

Foreign direct investment into emerging economies is expected to rise to $286 billion from an estimated $256 billion in 2007, contrasting with the overall trend for lower capital flows.

Net flows into equity markets are forecast to slip to $39 billion in 2008 from $43 billion last year as investors fret about valuation in emerging markets. Brazil and India are seen taking the bulk of the equity portfolio investments with $23 billion and $20 billion, though countries in emerging Europe and Asia should see some outflows, the IIF forecast.

Flows into bonds and commercial bank lending are seen tumbling to $406 billion from $483 billion in 2007, mainly due to lower bank financing to countries in emerging Europe, the IIF said. (Editing by James Dalgleish)