Investors are entering the fourth quarter with a slightly raised exposure to shares and holding high reserves of cash that could quickly be used to fuel a stock rally, Reuters polls showed on Thursday.

Surveys of 59 leading investment houses in the United States, mainland Europe, Britain and Japan showed an average of 50.5 percent of a balanced portfolio was held in equities in September, up from 49.2 percent in August.

The shift was mainly the result of a move away from bonds -- down to 34.6 percent from 36.1 percent. But investors also showed their concern about the state of global finance by pumping money into safe-haven cash.

Cash allocations were at 6.3 percent, the highest since the polls were first conducted in their current form at the start of 2009. High levels of cash have in the past been counter-indicators, a precursor to a stock rally.

The main risk to our current (underweight equities) asset allocation strategy is that at the end of September, we consider that investors' sentiment has reached an extreme negative level, said Jean-Yves Dumont, head of asset allocation strategy and funds at Dexia Asset Management.

We could therefore experience a significant (stock) rally should the newsflow turn more positive on the U.S. economy or a concerted European (debt crisis) solution.

Global equity markets have rallied over the past week. Traditionally, the fourth quarter also is one of stock market gains, most of which come in December.

Nonetheless, there are few signs at the moment that the issues that have been limiting risk investment -- the slowing global economy and the euro zone debt crisis -- are going away.

For that reason, cash remains so popular.

It is best to remain cautious for the time being with higher than usual exposure to core developed market government bonds and cash, said Neil Michael, executive director of investment strategies at London & Capital.


U.S. fund managers bumped up their exposure to shares in September, a poll of 14 U.S.-based asset management firms

The investors raised their allocation in equities to 64.1 percent from 63.0 percent in August.

They also cut their bond allocation to 27.1 percent in September from 28.7 percent the previous month. Cash was slightly up at 2.9 percent.

European investors slightly raised stock holdings. The survey of 17 Europe ex-UK asset management firms showed a typical balanced portfolio held 42.4 percent of equities in September, down from the August trough of 41.2 percent.

Bond holdings dipped to 40.9 percent from last month's 41.9 percent, which was their highest in at least a year

Cash holdings were at 10.3 percent, down slightly from 10.4 percent but staying historically high and almost double December's level.

Japanese fund managers raised their global stock weighting to the highest in nine months.

The poll of 12 Japan-based institutional investors showed the average equities weighting in model portfolios jumped to 47.1 percent in September. That was up from 42.1 percent the previous month, which was the lowest since January 1999.

The average global bond weighting dropped to 45.5 percent in September, the lowest since December 2009, from 49.6 percent in August, which matched a record peak touched in March and again in May.

UK investors opted to brave inflation rates nearing 5 percent and increased their cash holdings.

The 15 investment managers there increased allocations to cash in balanced portfolios to 7.8 percent on average in September, from 5.4 percent a month earlier.

The hike in cash came at the expense of stocks - down to 48.5 percent from 50.4. The average allocation to bonds climbed slightly to 24.7 percent from 24.4 percent previously.

(Additional reporting by Natsuko Waki and Chris Vellacott in London, Herbert Lash in New York, Akiko Takeda in Tokyo and Bangalore Polling Unit; Written by Jeremy Gaunt; Editing by John Stonestreet)