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LONDON, Apr 13 (Reuters) China was the top emerging markets pick for investors who bought $1.5 billion of Chinese stocks in February, but a rise in cash positions may signal risk aversion is deepening, Emerging Portfolio Fund Research said.

EPFR, which tracks 10,000 funds worldwide with $5 trillion in assets, said dedicated emerging market funds as well as international and Pacific region investors were net buyers of Chinese stocks for the second month in a row, but cash weightings also jumped across the sector.

It said the average cash weighting for global emerging market equity funds had risen to 3.5 percent at the end of February after starting 2006 at a five-year low. Average cash weightings rose 112 basis points, the study found.

''Funds cannot get enough of Chinese equities but most fund groups increased cash weightings in a possible sign of growing risk aversion,'' EPFR said in a statement late on Wednesday that detailed fund moves for the month of February.

The group said funds had increased exposure to China at the expense of South Korea and Taiwan while Europe-, Middle east- and Africa-oriented funds reduced allocations to Poland while boosting exposure to Russia and Turkey.

But Brazil still remains the biggest overweight for emerging market funds, followed by Thailand, Russia, Turkey and South Korea.

On bond markets, EPFR said narrowing spreads between emerging sovereign debt and U.S. Treasuries meant emerging bond funds struggled to find good returns. Spreads on the benchmark JP Morgan Emerging Market Bond Index Plus narrowed to record levels of 186 bps over Treasuries at the end of February.

Funds sold Argentine, Philippine and Colombian bonds in February, while adding to Venezuelan holdings for the sixth month running, EPFR said.

In Europe investors sold out of Hungary and Ukraine where political problems weighed, and moved cash into Poland.

REUTERS MP PM1431