By Jemima Kelly
LONDON (Reuters) - British investors boosted their euro zone equity holdings in January to a 1-1/2-year high while slashing North American bond holdings, as they bet the economic recovery would favour riskier assets, a Reuters poll shows.
A monthly poll of 12 UK-based investment managers released on Friday showed investment in euro zone stocks at 15.8 percent of global equity portfolios, the highest level since June 2012.
The average allocation to stocks across all regions was 55.1 percent, up from 53.9 percent in December and the highest since at least April 2012.
But investors warned that after the last unimpressive earnings season, equities would struggle to rise further until company profits show signs of improvement.
"Equity market fundamentals continue to improve but the concern now is that valuation levels are beginning to look stretched," said Robert Pemberton, investment director at HFM Columbus, a wealth management group.
The Reuters poll, conducted between Jan 20-28, showed holdings in emerging Asia cut to 10.7 percent, their lowest since April.
Overall investment in bonds was flat at 24.2 percent while holdings in alternatives edged down to 10.1 percent from 10.4 percent. Property investment fell to 3 percent from 4 percent a month earlier.
The U.S. Federal Reserve's trimming of its massive economic stimulus programme and concern about a slowdown in Chinese growth have triggered a widespread shift from emerging to developed markets that has accelerated this year.
Early 2014 has seen stock markets gain across the euro zone's periphery - Ireland, Italy, Spain, Portugal and Greece - as those countries begin to recover from the debt crisis.
Portugal's benchmark equity index <.PSI20> is up 3 percent this year, while other peripheral markets <.ISEQ> <.IBEX> have also risen while German and French stocks fell <.GDAXI> <.FCHI>.
Investment in emerging European equities rose to 1.8 percent in January, the poll showed. While relatively small, that is still the highest level since at least April 2012.
Euro zone bond holdings dipped slightly but were still at their second-highest level since at least April 2012. U.S. and Canadian bond holdings were 28.3 percent, having slumped from 35.2 percent this time last year.
All respondents said they were most overweight on corporate bonds in their debt holdings.
"From a valuation perspective, high-yield spreads in themselves look attractive, but yields as a percentage of Treasuries look even more compelling," said Matthew Farrell, investment specialist at London & Capital.
(Editing by Catherine Evans)