Reuters polls of 47 investment managers and strategists in Japan, continental Europe, Britain and the US showed a gentle move away from US debt combined with higher levels of cash in equity portfolios.US and British funds cut treasury holdings, while European investors increased and Japanese weightings stayed steady.

"Our view is still that rates will go up further in the US and that the market is being too complacent on its view on growth," HSBC Securities (London) global strategist, Bill O'Neill, said.

O'Neill said he expects 30-year treasury yields to back up between 30 and 40 basis points above their current 5.88 per cent.

The Federal Reserve decided to leave interest rates on hold when it concluded its latest interest rate meeting on Wednesday. But in a statement accompanying its decision it warned that credit costs may have to go up again soon.European investors were more upbeat about treasuries, betting that a soft landing was likely.

Cash held in equity portfolios rose in every region except Japan, mostly due to lingering concerns about global valuations.

Funds also expressed concerns about US shares, though net-flows were mixed, in part due to a re-weighting by British funds which had been short of the market.

"We expect earnings growth momentum to decline," Commerzbank International Capital Management (Frankfurt) strategist, MartinVom Hagen, said."In the third and fourth quarter it is going to be very hard for US corporates to meet those earnings expectations which are now priced in."British funds cut back on exposure to european equities though holdings still remain higher than six months ago.

Allocations to pan-European markets fell across the board, by 2.5 percentage points in the month to 34.9 per cent.While fund managers remained positive about Europe, the euro's recent fall after an abortive rally failed to take it back to dollar parity has taken some of their enthusiasm away."We are tip-toeing out of Europe" Norwich Union Investment Management senior economist, John Ip,said.

"We were quite positive on Europe late last year but Europe has really outperformed the UK quite a bit so on valuation grounds we are no longer as positive."

Japanese institutional investors institutions planned to keep the biggest chunk of funds in stocks -- about 51.56 per cent against 50.14 per cent last month.

Allocations from Japan for the US and Canada comprised 38.30 per cent of the average share portfolio, down from 38.66. Japan rose to 27.82 per cent from 26.86, while the allocation of euro-zone share markets was virtually unchanged at 21.71 per cent.

But worries over corporate reform fuelled concern about the direction of domestic stocks, while expectations the Bank of Japan (BoJ) will abandon its zero-rate policy, and an excess supply of bonds, prompted a bearish outlook for Japanese debt issues. "If markets perceive a slowdown in structural reform and deregulation, there could be selling. A yen rise and an abandoning of the BoJ's zero interest-rate policy could be negative," said Okasan Research Institute's Takashi Ono.

-- (Reuters)