TOKYO (AFP) -- Private firms and investors pumped record high levels of capital funds into developing countries last year but most of the money failed to reach the poorest nations, the World Bank said Tuesday.

Net capital flows into developing countries reached 491 billion dollars in 2005, according to the bank's annual report on global development finance.

The rise was largely driven by privatizations, mergers and acquisitions, external debt refinancing and strong demand for emerging market debt and equities as investors flocked to higher yielding assets, it said.

"These increased capital flows reflected greater confidence in the economic prospects of several developing countries," said World Bank chief economist Francois Bourguignon.

Developing nations enjoyed combined economic growth last year of 6.4 percent -- topping 5.0 percent for the third straight year and beating the 2.8 percent pace of developed nations.

The World Bank expects growth in developing countries to remain above five percent per year through 2008, noted the report, which was presented at the bank's annual conference on development economics in Tokyo.

However not all developing nations benefited from the record inflows, most of which were bound for a small group of middle income countries, it said.

Russia and Turkey were major recipients, helping to lift flows into Europe and Central Asia as a whole by 19.7 percent from 2004 to 191.7 billion dollars -- 39 percent of the total inflows.

East Asia and the Pacific saw a rise of 9.8 percent to 137.7 billion dollars while flows into Latin America and the Caribbean jumped by 59.2 percent to 94.4 billion dollars.

By contrast many low-income countries still have little or no access to international private capital, the report said.

Flows into Sub-Saharan Africa remained relatively low at 28.4 billion dollars, although that marked an annual gain of 37.2 percent.

Private flows have so far withstood worries over high oil prices, rising global interest rates and growing trade imbalances, but developing countries must prepare for "whatever global storms may be brewing," the report warned.

While current account deficits in developing countries as a whole are close to balance, oil-importing countries have seen their deficits increase substantially due to high energy costs and often unsustainable growth, it said.

"All countries would be affected by a disorderly unwinding of global imbalances, which would destabilize international financial markets and curtail global growth," Bourguignon wrote in the foreword to the report.

"But developing countries would suffer disproportionately, particularly if the imbalances were to foster and backlash of trade protectionism," he warned.

The surge in capital flows also reflects rising trade flows and financial integration between developing countries, so-called "south-south flows".

"While these south-south flows are a relatively small share of total private flows, they have the potential to change the face of development finance, particularly if growth in developing countries continues to outpace that in the developed countries," said Mansoor Dailami, lead author of the report.

Capital inflows may be at record highs but developing countries cannot rely on private firms to provide adequate infrastructure in water, energy, transportation and telecommunications, the Tokyo conference heard.

Private sector investment in developing countries' infrastructure such as water, energy, transportation and telecommunications more than halved over the six years to 2003, requiring a greater public sector role, the World Bank said.