UK investors slash stock bets as Greece worries dent risk appetite - poll

LONDON (Reuters) - British investors slashed their equity holdings to a three-year low in June and piled into the safety of cash, a Reuters poll has found, as worries over an ongoing Greek debt crisis drove a move out of riskier assets.

The monthly survey of nine investment managers based in the UK found that the average exposure to global equities, which are still trading near record highs despite having fallen over the month on worries over Greece, fell to 47.9 percent, down from 48.8 percent in May. That was the lowest since July 2012.

Holdings of cash in investors' globally balanced portfolios, meanwhile, rose to 10.4 percent from 9.1 percent the previous month, the highest in eight months.

Investors were closely monitoring talks between cash-strapped Athens and its creditors all month, as they tried to work out whether a deal could be reached or Greece would default on a repayment due to the IMF.

With talks having broken down, the latter looks almost certain, and many reckon a vote due on Sunday will effectively be a choice of whether or not to stay in the euro. That makes risk appetite likely to remain low, with many investors worrying about contagion across other southern European countries.

"We expect one of the overriding features over coming quarters will be bouts of higher volatility and risk-off episodes, which means that investors will need to be far more wary," said Matthew Farrell, investment specialist at London & Capital.

The poll, which was conducted between June 19 and June 29, also showed holdings of alternatives, such as hedge funds and private equity, jumped to 14.6 percent. That was up from 11 percent the previous month, and the highest in three years.

Allocation to bonds, which have been highly volatile in recent months, fell to 23 percent, down from 25.9 percent in May and the lowest since October.

"We have reduced weightings to fixed income over the quarter, increasing exposure to 'alternatives', predominantly long/short equity and global macro," said Rob Pemberton, investment director at HFM Columbus.

Asked whether a U.S. interest rate rise by the end of the year was fully discounted, the poll found a mixed response.

"This issue is not so much 'will there be a rate rise', which is priced in, but rather 'how quickly and steeply', which is what the market will fret about," said Pemberton.

(Reporting By Jemima Kelly; Editing by Raissa Kasolowsky)

By Jemima Kelly