Investors have become a little more upbeat heading into the second half of the year, lifting stock allocations from 2011 lows but remaining cautious with plenty of safe-haven cash and bonds. They also lifted their exposure to Eurozone stocks and bonds in the month, despite the ongoing debt crisis. Reuters asset allocation polls released yesterday showed leading investors across the world recovering from May\'s retrenchment, brought on by fears over a stagant US economy, potential over-heating in China, and the Eurozone debt crisis. On average, 58 fund firms in the United States, Europe excluding the UK, Japan and Britain held 51.5 per cent of a balanced portfolio in equities, up from 50.7 per cent in May. Bond holdings were at 35.1 per cent, down slightly from 35.5 per cent a month earlier. Cash was at 4.9 per cent, down from 5.2 per cent. The overall picture suggested that investors have overcome some of their worst fears but are far from bullish. June\'s equities allocation in the US, for example, is far closer to what it was last year before the Federal Reserve launched its second asset-buying quantitative easing programme (QE2) than it was in the immediate months that followed. The quantitative easing programme, which was due to wind up, provided a major sentiment boost for investors. \"The investment environment continues to be highly uncertain,\" said Yoshinori Nagano, senior strategist at Daiwa Asset Management in Tokyo. Investors are being battered by the Greek sovereign debt crisis, in which a default could spread into a wide range of other assets through banking losses and contagion into other euro zone countries. Despite this, the Eurozone saw more interest from investors in June, with holdings of both euro zone stocks and bonds rising. This appeared to be based on a belief that policymakers would do what was necessary to keep the crisis contained. \"Ultimately, [Greece] cannot be allowed to fail because this could cause a contagion effect across peripheral Europe,\" said Neil Michael, executive director of investment strategies at London and Capital. US fund managers added to equities for the first time in two months and decreased bond exposure. Fifteen US-based fund management firms held an average of 63.9 per cent of assets in equities, up from 61.6 per cent a month earlier and 63.3 per cent in April. Bond holdings decreased to 28.5 per cent in June from 30 per cent in May and 29 per cent in April. Cash exposure remained at 3 per cent in June. European investors raised equities and cut cash for the first time this year while they held their bond holdings largely steady. The survey of 17 Eur-ope-based asset management firms outside Britain showed a typical balanced portfolio holding 47.6 per cent of equities in June compared with 45.5 per cent in the previous month. It held 39.0 per cent in bonds compared with 39.5 per cent in May. Cash holdings fell for the first time since December to 7.1 per cent from 8.8 per cent . Japanese fund managers\' global bond weighting was near a record high while their stock weighting sunk towards a 12-year low. The poll of 13 institutions found the average weighting for global bonds was 49.5 per cent, close to the 49.6 per cent logged in March and May, which was the highest since the survey began in February 1995. Their average weighting for global equities edged down to 42.6 per cent in June after a three-month high of 43.0 per cent in May. Cash positions rose to 4.8 per cent this month from the three-month low of 4.5 per cent in May. British fund managers trimmed equity holdings and lifted bonds. The 13 UK-based management companies polled held 52 per cent of their portfolios in stocks, down from 52.0 in May. Bond holdings rose to 23.3 per cent from 22.9 per cent. Cash weightings rose slightly to 4.5 per cent from 4.4 per cent. From / Gulf News