Emerging markets equity funds lost some momentum last week, taking in around $3.3 billion in net inflows after three straight weeks of absorbing more than $5 billion per week, according to data provider EPFR Global.

At the country level, China equity funds registered outflows for the first time in eight weeks as investors anticipated the sell-off that occurred in the wake of poorer than expected earnings at a time when share price valuations were already in question. EPFR didnÆt disclose the actual amount of outflows from China equity funds.

ôAfter the recent run-up in emerging equity markets, especially in Asia, valuations are starting to look rich again and investors are holding back a bit,ö notes Massachusetts-based EPFR Global analyst Cameron Brandt.

EPFR says the outflows from China equity funds were also due to official comments, which were later denied, suggesting that a scheme to allow A and H shares to be swapped was being studied.

Brandt says the prospect of lower US interest rates and an even weaker dollar could chase some more money away from emerging market funds to markets with better growth prospects, stable or rising interest rates and appreciating currencies.

The more cautious approach to China didnÆt affect Brazil, Russia, India and China (Bric) equity funds, which took in new money for an eighth straight week, according to EFPR.

Elsewhere in the world last week, US Equity Funds posted $4.62 billion in net outflows. Overall outflows are still a relatively modest 6% of the net gains these funds have recorded so far this year, although the recent round of troubling jobs and housing data could accelerate redemptions, EPFR says.

Year-to-date flows into all EPFR Global-tracked emerging markets funds are now 44% higher than the full-year total for 2006. EPFR tracks around $10 trillion in assets in traditional and alternative funds worldwide.