April 19 (Reuters) - U.S. equity funds suffered sharp outflows in the seven days to April 17 as investors anticipated prolonged restrictive interest rates amid stubborn inflation in a resilient U.S. economy.

Conflict escalation in the Middle East following Iran’s attack on Israel also dampened risk appetite.

According to LSEG data, investors offloaded a net $21.15 billion worth of U.S. equity funds, the most in a week since Dec. 21, 2022.

Federal Reserve Chair Jerome Powell, commenting on recent U.S. inflation trends, indicated on Tuesday that the central bank could continue its restrictive monetary policy if inflation remains elevated.

U.S. large-cap equity funds suffered $11.59 billion worth of net selling, the biggest outflow in a week since Feb. 7. Small-, multi- and mid-cap funds saw net disposals of $2.71 billion, $2.13 billion and $526 million, respectively, during the week.

U.S. investors offloaded consumer discretionary, healthcare, and gold & precious metal funds worth a net $701 million, $651 million and $447 million, respectively, but purchased around a net $281 million worth of financial sector funds.

U.S. bond funds recorded a weekly outflow of $3.83 billion, the largest net selling since mid-December.

Investors withdrew a net $2.36 billion from U.S. taxable bond funds and $1.47 billion from municipal bond funds.

U.S. short/intermediate government & treasury, and short/intermediate investment-grade funds attracted about $805 million and $284 million worth of net inflows, respectively.

Money market funds saw $118.1 billion worth of net selling, the biggest weekly outflow since at least July 2020.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Kirsten Donovan)