LONDON - U.S. and British institutional investors walked away from euro zone bonds during November as fears for the future of the currency bloc grew, Reuters asset allocation polls showed on Wednesday.

The surveys of 59 leading investment houses in the United States, Europe ex UK, Britain and Japan also showed an increase in exposure to stocks, mainly as a result of demand for emerging market equities.

Suggesting caution still reigns, however, cash holdings rose to 6.4 percent from 5.9 percent and were at their highest for the year.

Overall, the polls showed a model mixed-asset portfolio held an average of 50.6 percent of assets in equities, up from 49.5 percent in October. Bonds fell to 35.3 percent from 35.9 percent.

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GRAPHIC: Asset allocation poll http://link.reuters.com/byt35s

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One key move in the allocations was the withdrawal of U.S. and UK investors -- the so-called Anglo-Saxons -- from crisis-hit euro zone debt.

The political and policy paralysis at the heart of Europe has raised the specter of a global recession, and greater uncertainty and volatility for asset markets, said Neil Michael, executive director of investment strategies at London & Capital.

Globally, the bonds allocation to the euro zone fell to 26.9 percent from 27.4 percent. But this masked a much greater U.S. and UK retreat.

U.S. investors moved to 17.6 percent from 19.1 percent and British counterparts sliced their exposure to just 8.9 percent from a previous 11.9 percent.

European and Japanese investors raised their exposure to euro zone debt slightly, but not in a way that could be considered a sign the crisis was ending.

The greatest risk we perceive today remains the tail risk on the (euro) area. The contagion to core countries like France has not stopped yet, said Nadege Dufosse, senior asset allocation manager at Dexia Asset Management.

REGIONALLY

U.S. fund managers moved back into volatile equity markets in November and reduced their bond exposure.

The poll of 15 U.S.-based asset management firms showed allocations to equities rising to 63.7 percent in November from 60.1 percent the previous month.

In contrast, the asset management firms cut their bond allocation to 29.3 percent in November from 32.0 percent in October. Cash holdings were at 2.7 percent, down just a touch from 2.8 percent in October.

European funds increased equity holdings for a third month in a row in November and cut bonds, but they also boosted cash.

The survey of 17 Europe-based asset management firms outside Britain showed a typical balanced portfolio held 44.0 percent of its assets in equities, its highest since July and up from 43.3 percent in October.

Allocation to bonds fell to 39.4 percent, its lowest since June, from 40.8 percent. Cash rose to 9.9 percent from 9.3.

Japanese fund managers cut their global stock weighting and raised their allocations to bonds and cash.

The poll of 12 Japan-based institutional investors showed their average equities weighting falling to a three-month low of 44.7 percent, compared with 46.8 percent in October.

Bonds rose to 48.7 percent from 46.3 percent and cash holdings were lifted to 3.6 percent from 2.7 percent.

British investors slashed exposure to the euro zone in global bond portfolios to the lowest levels in more than a year during November.

Otherwise, UK fund managers raised equities and cut overall bonds.

-- Reuters also issued two similar polls from China and Italy, neither of which were included in the global calculations.

The survey of 13 Italy-based asset management firms both showed stock and bond holdings rising in November at the expense of cash.

In the China poll, fund managers raised their suggested equity weightings for the third month in a row, betting on a rebound that could be triggered by looser monetary policy and hopes for a euro zone crisis solution.

(Additional reporting by Akiko Takeda in Tokyo, Jennifer Ablan in New York, Natsuko Waki and Chris Vellacott in London, Samuel Shen and Jacqueline Wonf in Shanghai, Maria Pia Quaglia in Milan, and Bangalore Polling Unit)

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