* US stocks cut to 39.7 pct, US bonds cut to 37.9 pct
* Eurozone stocks up at 19.3 pct, highest since Sept. 2015
* Majority think US economy can withstand another rate rise
* For poll data: reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/asset-allocation-polls
By Claire Milhench
LONDON, June 30 (Reuters) - Global investors cut exposure to U.S. stocks in June, citing caution on stretched valuations, and raised their euro zone equity holdings to their highest since September 2015, a Reuters poll showed on Friday.
The Reuters monthly asset allocation survey of 47 fund managers and chief investment officers in Europe, the United States, Britain and Japan was carried out between June 15 and 28, a month in which U.S. tech stocks sold off heavily.
The rout saw the combined market cap of the five biggest U.S. tech firms drop by $120 billion in less than a week and sparked of a global equity market reversal.
The tech-heavy Nasdaq is set to end June down 0.9 percent, bringing a seven-month winning streak to a close. It is still up 14 percent so far this year.
Around three-quarters of poll respondents who answered a special question on tech stocks said they were not overvalued, but investors have reduced their U.S. equity holdings and rotated into euro zone stocks this month.
U.S. stocks were trimmed to 39.7 percent of global equity portfolios, the lowest since November when Donald Trump was elected U.S. president. Since then the S&P 500 has rallied hard and is up 8 percent so far this year on expectations of tax cuts and increased spending.
But investors have grown increasingly sceptical that Trump can deliver on his promises.
“An unprecedented level of economic and fiscal policy uncertainty still surrounds the new U.S. administration,” said Mouhammed Choukeir, chief investment officer at Kleinwort Hambros. “This could spill into financial market volatility.”
He prefers Europe, where valuations are cheap and political noise has quietened since the French election in which centrist candidate Emmanuel Macron won an emphatic victory.
Investors raised their euro zone equity holdings to 19.3 percent, a near two-year high, in June.
They also showed a preference for euro zone debt over U.S. bonds, raising the former almost 1 percentage point to 27.2 percent of their global bond portfolios. In contrast, they cut their U.S. debt holdings by 2.2 percentage points to 37.9 percent, the lowest since March.
The U.S. Federal Reserve raised interest rates for the second time this year in June and set out plans to start cutting its $4.5 billion portfolio.
The move showed the Fed’s willingness to look past a run of soft inflation data and signalled a determination to move ahead with policy tightening. That has driven the U.S. bond yield curve to its flattest in a decade.
Although three-quarters of poll participants who answered a special question on the U.S. economy thought it was strong enough to withstand another Fed rate rise this year, a number expressed reservations.
Jan Bopp, an asset allocation strategist at Bank J Safra Sarasin, was amongst those who thought the Fed could be making a mistake in hiking rates.
“My concern is that the U.S. economy is losing momentum,” he said, citing car sales, lending surveys and manufacturing. “Despite all that the Fed seems to be very dedicated. If only to get rates high enough to have ammo for the next downturn.”
The caution was also evident in broader positioning, with investors trimming their overall equity allocations to 46.5 percent, the lowest since March, and raising their bond holdings to 40.7 percent, the highest since December.
“The upswing in global growth that started in 2015 is cooling off and inflation pressures are easing. This is good for bonds but stocks may be disappointed and we are only modestly overweight,” said Trevor Greetham, head of multi-asset at Royal London Asset Management (RLAM).
Investors raised their exposure to UK assets after the June general election, lifting UK equities to 9.9 percent, while UK bond holdings jumped 1.5 percentage points to 10.4 percent, the highest since January.
The election resulted in a hung parliament, weakening Prime Minister Theresa May’s hand in Brexit negotiations.
As a result, three-quarters of poll respondents who answered a question on the election outcome, said it made a softer Brexit more likely, rather than the hard Brexit that May had previously promised her supporters.
“The prime minister failed to win backing for a tightly controlled Brexit process focused on cutting immigration and leaving the single market,” said RLAM’s Greetham, adding that opponents of a hard Brexit within both the Conservative and Labour parties would argue the public mood is one of compromise.
However, Raphael Gallardo, a strategist at Natixis Asset Management, thought it was hard to see how the supporters of a soft Brexit could unite to exert power, saying new elections would be needed for a soft Brexit majority to gain control.
Additional reporting by Maria Pia Quaglia Regondi and Hari Kishan Editing by Jeremy Gaunt.