LONDON - Investors have become a little more upbeat heading into the second half of the year, lifting stock allocations from 2011 lows but remaining cautious with plenty of safe-haven cash and bonds.

They also lifted their exposure to euro zone stocks and bonds in the month, despite the ongoing debt crisis.

Reuters asset allocation polls released on Thursday showed leading investors across the world recovering from May's retrenchment, brought on by fears over a stagnant U.S. economy, potential over-heating in China, and the euro zone debt crisis.

On average, 58 fund firms in the United States, Europe excluding the UK, Japan and Britain held 51.5 percent of a balanced portfolio in equities, up from 50.7 percent in May.

Bond holdings were at 35.1 percent, down slightly from 35.5 percent a month earlier. Cash was at 4.9 percent, down from 5.2 percent.

The overall picture suggested that investors have overcome some of their worst fears but are far from bullish.

June's equities allocation, for example, is far closer to what it was last year before the Federal Reserve launched its second asset-buying quantitative easing program (QE2) than it was in the immediate months that followed.

QE2, which ends on Thursday, provided a major sentiment boost for investors.

The investment environment continues to be highly uncertain, said Yoshinori Nagano, senior strategist at Daiwa Asset Management in Tokyo.

Investors are being battered by the Greek sovereign debt crisis, in which a default could spread into a wide range of other assets through banking losses and contagion into other euro zone countries.

Despite this, the euro zone saw more interest from investors in June, with holdings of both euro zone stocks and bonds rising.

This appeared to be based on a belief that policymakers would do what was necessary to keep the crisis contained.

Ultimately, (Greece) cannot be allowed to fail because this could cause a contagion effect across peripheral Europe, said Neil Michael, executive director of investment strategies at London & Capital.

REGIONALLY

U.S. fund managers added to equities for the first time in two months and decreased bond exposure.

Fifteen U.S.-based fund management firms held an average of 63.9 percent of assets in equities, up from 61.6 percent a month earlier and 63.3 percent in April.

Bond holdings decreased to 28.5 percent in June from 30 percent in May and 29 percent in April. Cash exposure remained at 3 percent in June.

European investors raised equities and cut cash for the first time this year while they held their bond holdings largely steady.

The survey of 17 Europe-based asset management firms outside Britain showed a typical balanced portfolio holding 47.6 percent of equities in June compared with 45.5 percent in the previous month.

It held 39.0 percent in bonds compared with 39.5 percent in May. Cash holdings fell for the first time since December to 7.1 percent from 8.8 percent.

Japanese fund managers' global bond weighting was near a record high while their stock weighting sunk toward a 12-year low.

The poll of 13 institutions found the average weighting for global bonds was 49.5 percent, close to the 49.6 percent logged in March and May, which was the highest since the survey began in February 1995.

Their average weighting for global equities edged down to 42.6 percent in June after a three-month high of 43.0 percent in May. Cash positions rose to 4.8 percent this month from the three-month low of 4.5 percent in May.

British fund managers trimmed equity holdings and lifted bonds.

The 13 UK-based management companies polled held 52 percent of their portfolios in stocks, down from 52.0 in May. Bond holdings rose to 23.3 percent from 22.9 percent.

Cash weightings rose slightly to 4.5 percent from 4.4 percent.

(Additional reporting by Chris Vellacott and Natsuko Waki in London, Jennifer Ablan in New York, Kaori Kaneko in Tokyo and Bangalore Polling Unit; Reporting by Jeremy Gaunt)

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