Fund managers are weighing up their defensive investment options as a litany of poor economic indicators from the UK, Europe and the United States hammers home fears another global recession is on its way.

While some asset allocators are resisting the latest flight to gold or Swiss francs, others are pondering how to shape their clients' portfolios if the United States loses its banner credit rating and a 109 billion euro Greek bailout plan promises more than it delivers.

A continuing slowdown in the world economy is not great for risk assets and these are probably overpriced, which is why I've positioned the portfolio defensively, Martin Gray, a fund manager of MAM Funds' CF Miton Strategic Portfolio, said.

Gray said he was buying modestly into the large end of the FTSE 100 which is dominated by global companies heavily knocked by sagging market mood despite paying strong dividends.

In an interview with Reuters Insider on Wednesday, Savvas Savouri, chief economist at hedge fund Toscafund said U.S. dollar-facing investors should up their exposure to large cap equities that respond well to inflation and a weak currency.

The U.S. is spewing out far too much paper into a world that doesn't really want to own it going forward, he said. Against that backdrop, the currency is going to be a casualty and a weak dollar is good for those corporates in the U.S. that earn overseas or trade competitively, Savouri said.

They could also consider diversifying into UK Gilts or other highly-rated European sovereign paper, which although less liquid, could help to shore up their sovereign debt portfolios.

...For all the travails of the eurozone, you can see that currency is going up against the U.S. dollar. And it shows you that in relative terms, the problems in the U.S. are far far structurally worse, he said.

Tim Parker, portfolio manager of T.Rowe Price's Global Natural Resources Strategy, is backing natural gas stocks to offset volatility in oil prices, and fertilizer producers which can help the world meet rising demand for food.

The world's population is growing and as economic development spreads, it is eating more calories and protein -- a particularly rapacious consumer of agricultural products, he said.

...Arable land is limited so productivity must grow - increasing demand for such basic fertilizers as nitrogen, potassium, and phosphate, the building blocks of agriculture.

Compounding worries for funds chasing alternatives to debt-drenched economies in the West, Gray said emerging market assets didn't look particularly attractive either as a dip in consumer demand hit exports and industry in places like China.

But Colin Ng, head of Asian equities at Baring Asset Management said the outlook for Asian economies continued to be supported by favorable demographics and central banks keen to accommodate rapid growth while keeping close watch on inflation.

Percival Stanion, head of Barings' multi-asset team and manager of the Baring Dynamic Emerging Markets Fund, said the fund was around 7 percent exposed to gold and 20 percent weighted to Australian government bonds, which he said offered good protection should Asian growth slow over the coming months.

We believe that by being selective in our government bond holdings, we can gain exposure to effective risk diversifiers with safe characteristics, and here we favor economies such as Australia, Mexico and Poland - markets with high real interest rates and few credit quality issues on the horizon, he said.

(Editing by David Cowell)

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