MANILA, Philippines - Negative developments overseas resulted in an 88.3% drop in net foreign direct investment (FDI) inflow in July to $26 million, the central bank said Wednesday.

The July figure brought the total FDI for the first seven months of 2011 to $804 million, down nearly 10% from last year.

Net FDI in July was lower than June's $64 million, and was the lowest since October 2010.

"Renewed concerns on sovereign debt issues in Europe and a stalled recovery in the US continued to weigh down on investor sentiment despite the Philippine economy's continued favorable fundamentals," the Bangko Sentral ng Pilipinas (BSP) said in a statement.

Equity capital registered a net inflow of $43 million in July, 23% higher than in the same month last year. Net equity capital inflows of $236 million in the seven months to July were 67% higher than a year ago.

Bulk of the investments originated from the US, Japan, Hong Kong, South Korea and Singapore.

Real estate, manufacturing, mining, wholesale and retail trade, and utilities sectors benefited from the investments, BSP said.

FDI, portfolio inflows or hot money, and remittances from Filipinos working and living overseas help keep the country's balance of payments (BOP) in surplus.

BSP data showed the Philippines recorded a net portfolio investment inflow in the week of September 19 to 23 even though stock exchange data for the period showed foreign selling of shares in the week as the main index fell more than 9%.

The central bank is expected to raise its 2011 balance of payments surplus forecast. The January to August BOP surplus has exceeded the central bank's full-year surplus estimate of $6.7 billion.

In 2010, the Philippines posted a record BOP surplus of $14.4 billion. - With a report from Reuters