Dec 22 (Reuters) - Global equity funds saw significant withdrawals in the week up to Dec. 20 as investor enthusiasm over potential rate cuts waned and profit-taking set in ahead of the year-end holidays.

The markets have experienced a sharp rally since late October. Investors reassessed positions during the week and sold $12.5 billion worth of equity funds, marking their largest weekly net selling since June 21.

The MSCI All-World index dropped 0.9% on Wednesday, its steepest decline since Oct. 16, facing resistance near its March 2022 high of 724.49. Despite the recent pullback, the index has climbed nearly 15% since reaching a seven-month low on Oct. 27.

Investors pulled a net $10.45 billion out of U.S. equity funds, the biggest amount since Sept. 27. European and Asian funds also saw withdrawals worth $1.24 billion and $279 million, respectively.

The tech sector had $1.16 billion of outflows compared to net purchases of about $1.94 billion in the prior week. Financials and healthcare also recorded $838 million and $618 million worth of outflows, respectively.

Global bond funds lost $5.37 billion in outflows as net selling extended into a second successive week.

Global corporate bond funds broke an eight-week buying streak, with investors offloading funds worth a net $4.03 billion during the week. However, government and high-yield funds received $1.67 billion and $882 million, respectively, in inflows. Meanwhile, global money market funds experienced $35.61 billion worth of net selling, a second straight week of outflow.

Among the commodities segment, energy funds witnessed $99 million worth of net selling, the first weekly outflow in four weeks. Precious metal funds attracted $22 million in net purchases, its lowest inflow in three weeks.

Data covering 29,155 emerging markets funds showed investors sold $5.66 billion worth of equity funds, the largest weekly net selling since March 2020. EM bond funds also witnessed outflows, amounting to $721 million on a net basis.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Tasim Zahid)