Norway SWF swells in Q2, owns 1 pct of global stocks

OSLO Aug 14 (Reuters) - Norway's sovereign wealth fund had a return of 12.7 percent on its investment in the second quarter and owns 1 percent of all global stocks, taking advantage of a sharp financial market rally, the central bank said on Friday.

The fund grew by 14.9 percent in the second quarter from the end of March to 2.385 trillion Norwegian crowns ($396.6 billion), in line with earlier reported preliminary figures.

The fund, which in 2008 had its worst performance in its 10-year investment history, outperformed its benchmark by 2.1 percentage points, said Norges Bank, which manages the fund.

"Economic developments showed clear signs of stabilising in the second quarter and the uncertainty over the financial sector decreased," the fund's executive director Yngve Slyngstad said.

"The positive development in the second quarter has continued into the third quarter," he added in a statement.

Because the fund bought a larger than normal amount of equities during the downturn, its share of global stocks more than doubled over the past year to reach 1 percent. It held 1.7 percent of all European stocks, the central bank said.

The Government Pension Fund -- Global, commonly known as the "oil fund", invests Norway's oil and gas revenues in foreign stocks and bonds to save for future generations.

It ranks as the world's second biggest sovereign wealth fund after that of the United Arab Emirates and says that it is Europe's biggest equity investor. (Reporting by Wojciech Moskwa and Joergen Frich)