Reuters poll of 11-US asset allocators, conducted Monday through Thursday and released on Friday, found fund managers shaved their average allocations to the US equities to 44 per cent of global stock portfolios from 45 per cent in September's survey and doubled cash positions to 4 per cent from 2 per cent.

Despite the convulsions in the US stock markets which sent technology shares skidding lower on worries about the pace of profit growth, further crumpling of the European single currency has made it unappealing for the US funds to shift cash across the Atlantic. Allocations to European shares remain little changed and fund managers kept their holdings of Japanese shares unchanged after three months of cutting back bets there.

Over the last month, the US Nasdaq composite has tumbled 19.6 per cent, the Dow Jones industrial average has fallen 7.8 per cent, the Japanese Nikkei 225 index has slid 13.5 per cent and the Dow Jones index has fallen 6.0 per cent. But the euro has fallen 7.8 per cent over the last two months against the dollar. This brings its total losses for the year to 19.2 per cent.

For the US funds this would have easily wiped out any positive returns in European markets this year. A Group of 20 finance ministers communique made no mention of the euro's plight on Wednesday and a solitary comment from Mexican finance minister Jose Angel Gurria that the Group of 20 agreed the euro was misaligned did little to stem the currency's slide. The Group of Seven top industrial nations spent up to an estimated $6 billion Sept. 22 to buy euros in a bid to halt its precipitous decline, but the euro soon resumed its stately downward progression.

Market speculation about the US participation in fresh intervention has been rife since European Central Bank president Wim Duisenberg, in a newspaper interview last week, appeared to play down the prospects of near-term intervention and seemed to encourage the view that the United States would not join in any more euro-supportive action.

Mr Charles Van Vleet, senior fund manager at Credit Suisse First Boston, said one of the main reasons for the euro's continued fall was the size of the US capital account deficit which reflected huge foreign direct investment by European companies in the United States.

"To see the euro recover you are going to have to see Europe stop buying so much in the US, not the US buying in Europe," he said. "It doesn't seem that the market is very bunched up on the short side against the euro. It's pretty unlikely that the central bank would catch many offside if they intervened which makes it less likely to be successful," he said.

Most fund managers are underweighing the US stocks vs the Morgan Stanley Capital International World Index, a well followed benchmark stock index which gives recommended allocations to global bourses based on relative market capitalisation.

Economic data stretching back to late May has raised hopes among investors that the Fed's interest rate tightening cycle which began in June 1999 has succeeded in slowing the giant $10 trillion US economy to a sustainable pace and removing the need for additional rate hikes.

Rates currently stand at 6.50 per cent of the US government data released on Thursday showed the pay and benefits of workers rose modestly in the third quarter of the year, in a report likely to further comfort the inflation-wary Federal Reserve.