UPDATE 2-US equity funds net $7.7 bln in latest week-Lipper

* U.S. focused equity fund net inflows $3.6 bln

* Non-domestic equity fund net inflows $4.1 bln

* iShares MSCI EM equity ETF (EEM) net inflow $1.65 bln

* U.S. municipal bond fund outflows rise to net $1.15 bln
(Updates with a graphic of muni bond fund outflows)

By Daniel Bases

NEW YORK, April 7 (Reuters) - U.S.-domiciled equity funds
took in a net $7.73 billion in the week ended April 6, with a
large share of the cash moving into emerging market stocks,
data from Lipper showed on Thursday.

Municipal bond funds, however, saw outflows of cash
increase to a one-month high of $1.15 billion, with a near
threefold increase over the prior week. This brings the streak
of outflows to 21 weeks for a total of $30.7 billion.

For a graphic showing net inflows/outflows and total assets
under management of, click on r.reuters.com/fet88r

For emerging market equities, the net inflow of $2.7
billion in fresh cash was the fourth-largest weekly tally since
Lipper started keeping records in 1992.

The big influence in this sector was the $1.65 billion
inflow of cash to the iShares MSCI Emerging Market exchange
traded fund (EEM).

"I think it is an example of people willing to take a bit
more risk given the upward momentum," said Jeff Tjornehoj,
senior research analyst at Lipper.

"We're also seeing inflows back into technology funds. They
had three weeks of outflows and now two weeks inflows. Not a
lot of money, but better than in the past and another example
of investors willing to stay in the market long enough to
appreciate some gains.

Technology funds took in $70.2 million for the week, a
modest increase over the prior period.

While the overall picture for the week was positive for the
equity funds, there was a sizable $1.93 billion pulled from the
SPDR S&P 500 ETF (SPY).

"It was a very good week for flows considering all the
distractions investors have to deal with. It showed discipline
among investors overall. The growth/value large-cap sector has
had outflows for a number of weeks. People are just more
comfortable with small-caps in general," Tjornehoj said.

Among the major equity classifications, only the large-cap
sector suffered net redemptions -- $1.63 billion. Small-cap
funds took in $56 million.

Non-domestic equities, overall, took in $4.1 billion in new
cash, outpacing the net inflow of $3.6 billion for U.S.-focused
equity funds.

Even as Japan struggles to come to grips with its
post-earthquake nuclear crisis, investors still put money into
Japanese focused equities, albeit at a much slower pace. A
major aftershock hit Japan on Thursday, reigniting fears over
the nuclear power crisis.

In the latest report, Japan-focused equity funds took in a
net $75.7 million, well off the $286 million in the prior week
and the record inflow just after the March 11 earthquake.

"I think a lot of people were done with that. They squeezed
the short-term profit out of the Japanese equity trade," he
said.

Gold and precious metals funds had the second best week in
the past 12 months. The sector had net inflows of $675 million
for the week ended Wednesday, during which time spot gold
prices XAU= rose to a record high of $1461.91 an ounce. They
have since extended that record.

FIXED INCOME

Money flowed across the asset classes with taxable bond
funds posting a healthy inflow of $5.13 billion, up from the
prior week's net inflow of $3.9 billion. Taxable bond funds
have had steady inflows since mid-December even as stock
markets have rallied from a mid-March dip back up to their best
levels since mid-2008.

While corporate high-quality bond funds had net outflows of
$115 million, the investment grade, high yield and flexible
funds each took in over $1 billion in net new cash

"People have not given up on corporate debt. They have
misgivings about the state of the U.S. Treasury or statements
by the (U.S. Federal Reserve). But they do trust corporations
have their balance sheets appropriately set and find the
risk/reward commensurate with that posture," said Tjornehoj.

"I think this is still more follow through of the scars of
2008/2009 where investors stopped trusting equities and put
cash into bonds. They are not willing to change that perception
so quickly. These scars are deep for a lot of people close to
retirement and they won't reengage with equites," he said.

The weekly Lipper fund flow data is compiled from reports
issued by U.S.-domiciled mutual funds and exchange-traded
funds.

The following is a broad breakdown of the flows for the
week, including exchange-traded funds (in $ billions):
Sector Flow Change Total Share

Change in Assets Assets Class

(pct) Count
==============================================================
All Equity Funds 7.733 0.28 2,837.016 10,044
- Domestic Equities 3.596 0.17 2,097.898 7,643
- Non-Domestic Equities 4.136 0.57 739.118 2,401
All Taxable Bond Funds 5.130 0.40 1,294.399 4,026
All Money Market Funds 2.985 0.13 2,339.273 1,515
All Municipal Bond Funds -1.148 -0.37 309.480 1,577