VIEW-Move out of cash into stocks in 2009

LONDON (Reuters) - State Street Global Advisors recommends clients move gradually out of cash to stocks in 2009, especially in the United States which is set to lead a economic recovery, its global chief investment officer said on Tuesday.

Richard Lacaille, who is also the head of global active equities, said the equity forward earnings yield has moved way beyond the 10-year government bond yield in the United States and globally, signalling an attractive valuation.

However, non-U.S. firms are witnessing faster downgrades in earnings, which point to bigger downsides for these stocks.

"Equities look cheap on valuation metrics. The U.S. economy is likely to lead us out of the place we are in in 2009. So valuation is more attractive in the U.S.," Lacaille told a media briefing.

"Cash is important for SSgA. But as we roll into 2009, for long-term investors it is not the asset class to go overweight. It's not a big part of the strategy we recommend in 2009."

Lacaille added: "Risk premia of gaining exposure to credit and equities is attractive. And that needs to be funded by something. During 2009, we expect to be progressively moving towards them. But it doesn't mean we will have a sudden overweight in equities."

SSgA, one of the biggest funds in the world, is the investment management arm of Boston-based State Street Corp (STT.N).

(Reporting by Natsuko Waki)