WRAPUP 1-Cautious investors lift stocks slightly-Reuters poll

LONDON Feb 26 (Reuters) - Investors slightly increased their exposure to stocks in February, preparing for a gradual rebound, but still maintained a deep risk aversion because of the declining world economy, Reuter polls showed on Thursday.

Surveys of 48 leading fund management firms in the United States, Japan, continental Europe and Britain showed average equity holdings at 54.3 percent in February, up from 54.1 percent a month earlier but well below the 59.6 percent long-term average.

Bond holdings dropped to 35.6 percent from 35.9 percent and cash slipped to 5.7 percent from 5.8 percent.

Caution, however, remained the watchword. Three-quarters of U.S. respondents, for example, did not change their allocations at all. In Europe, meanwhile, cash holdings were twice the long-term average.

The surveys were conducted when world stocks as measured by MSCI .MIWD00000PUS were falling to fresh 6-year lows as investors worried about both the declining world economy and the still precarious state of the global financial system.

The fact that risk aversion did not get worse during the month, however, may reflect a belief that the future will be brighter and that stocks in particular will offer bargains.

"Both U.S. and Japanese share prices could test new lows," said Tokio Marine Asset Management senior fund manager Kenichi Kubo. "But in that case, gradually increasing stock allocations would be a good strategy."

REGIONALLY

U.S. fund managers kept up a high exposure to corporate bonds and kept other allocations more or less the same.

The 13 U.S. based fund management firms surveyed held an average of 60.7 percent of their assets in equities, only a touch higher from 60.6 percent a month earlier.

Only three of the 12 respondents who participated in the January poll changed their overall allocation in February, suggesting little change in investment sentiment over the month.

Bonds were unchanged at 32.7 percent and cash up at 3.2 percent versus 3.1 percent a month earlier. [US/ASSET]

Fund managers in continental Europe lifted their cash allocations to a four-year high and took money out of stocks and bonds.

The monthly survey of 12 investment houses in the region showed cash holdings rose for a third consecutive month to 8.9 percent of portfolios -- their highest since at least April 2004. It compared with 8.5 percent in January.

Equity holdings fell to 44.2 percent from 44.8 percent in January. Bond holdings declined to 40.8 percent from 40.9 percent. [EUR/ASSET]

Japanese fund managers raised their global stock weightings from the previous month's 5 1/2-year low.

The average stock allocation of 12 fund managers rose to 50.7 percent from 49.8 percent in January, which was the lowest reading since May 2003.

Bond allocations ticked down to 44.8 percent in February from a decade high of 45.7 percent in January. Cash rose to 4.6 percent from 4.5 percent. [JP/ASSET]

British fund managers lifted stocks, cutting cash and bonds.

The 11 firms surveyed held an average of 61.7 percent in equities, up from 61.0 in January. Bonds were at 24.1 percent, down from 24.3 percent and cash dropped to 6.2 percent from 7.2 percent. [GB/ASSET] (Additional reporting by Jennifer Ablan in New York, Mari Terawaki and Hideyuki Sano in Tokyo, Natsuko Waki and James Molony in London, and Bangalore Polling Unit; Editing by Ruth Pitchford)

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