By Natsuko Waki
LONDON (Reuters) - Global investors kicked off the second half of 2013 by slashing holdings of emerging Asian shares to a two-year low and boosting euro zone stocks and bonds, Reuters polls showed on Wednesday.
Concerns about China's economic slowdown prompted investors to reduce exposure to the region most vulnerable to any hard landing for the world's second largest economy.
Surprising improvements in euro zone leading indicators encouraged them back into the region, which has long lagged the global recovery led by the United States and Japan.
Investors lifted overall equity holdings and cut bond weightings, but generally remained cautious, lifting cash levels to 11-month highs, the global asset allocation surveys showed.
The monthly polls of 53 investors across the United States, Europe and Japan showed funds reduced emerging Asian shares to 7.3 percent, their lowest since February 2011, from 8.8 percent last month.
They boosted euro zone stocks to 16.2 percent, the highest since March 2012, from 15.3 percent in June. Euro zone bond holdings rose to 27.3 percent, the highest since December 2011.
Investors boosted overall cash to 6.1 percent of their portfolios from 5.6 percent in June. This is the highest reading since August and above a three-year average of 5.3 percent.
They lifted equities slightly to 50.2 percent from 49.5 percent. Bond holdings fell to a 11-month low of 37 percent.
The poll was conducted between July 17 and 30, when world stocks rose to a two-month high, helped in part by favorable European data.
But emerging markets were under pressure as the prospect of an eventual end to the Federal Reserve's easy money caused a rapid exit of capital from those with most financing needs.
China's economic slowdown also weighed on investor morale. Beijing is reining in rapid credit expansion to restructure the world's second-largest economy to a model based on domestic consumption and away from export growth.
"While the downside risks to the U.S. economy appear diminished, prompting a probable shift in Federal Reserve policy, the momentum in the emerging markets is also reduced," said Alan Gayle, senior investment strategist at RidgeWorth Investments in Atlanta.
"Moreover, the eventual shift in Fed policy away from accommodation has and will likely put downward pressure on bonds (and) fixed-income substitutes over the near term including Real Estate Investment Trusts, high yield, and high-dividend stocks."
Within fixed income, investors cut Japanese bond holdings to 12.0 percent, a level not seen since December 2011.
Expectations for stronger growth in Japan on the back of Prime Minister Shinzo Abe's aggressive reflationary policies have made investors nervous about holding volatile government bonds, known as JGBs.
U.S. investors cut equity holdings to 56.2 percent, the lowest reading since at least April 2007. Bond holdings also fell over the last month to 35.4 percent, while cash rose to 3.6 percent.
Japanese fund managers raised share holdings to 43.7 percent this month, while cutting bond allocation to 49.9 percent from a record high of 53.6 percent in June.
European fund managers boosted cash levels to 7.7 percent, the highest since September, while they slashed emerging Asian equities and bonds to two-year lows..
British investors cut their bond holdings to 23.8 percent, the lowest level in more than a year, while equity holdings were largely flat at 53.9 percent after a steep fall last month.
(Additional reporting by David Randall in New York, Tom Bill in London, Massimo Gaia in Milan, Rahul Karunakar, Hari Kishan and Anu Bararia in Bangalore and Hideyuki Sano in Tokyo; Editing by Catherine Evans)