UPDATE 1-Norway's $710 billion fund continues to exit Europe

Fri Mar 8, 2013 4:41am EST

* European holdings 48 pct in 2012 vs 53 pct in 2011

* Equity holdings 61.2 pct at end 2012 vs 58.7 pct at end 2011

* Sells French, UK govt debt, buys Mexico, Japan

OSLO, March 8 (Reuters) - Norway's $710 billion sovereign wealth fund continued to shift away from Europe at the end of last year as the continent's economies struggled, buying into key Asian and emerging markets instead, it said on Friday.

The fund, one of the world's biggest investors, cut its European holdings to 48 percent by the end of the year from 53 percent a year earlier, shifting its portfolio to gain exposure to fast-developing markets where it sees the strength of the world's economy in the years ahead.

The oil fund, which owns about 1 percent of global shares, is raising its holdings in Asia, the Americas, and emerging markets in general, hoping its portfolio will better reflect the new world economy.

In the last quarter of the year, its holdings of French and British government bonds fell sharply while it bought Japanese, Mexican, German and Italian government debt, it said. It continued to have close to no exposure to Greek, Portuguese and Irish government debt.

A Reuters poll of leading investment houses in February indicated that a small majority investors believe the U.S. dollar will be the best-performing major currency this year.

The fund, which grew by about $100 billion over the past year, lifted the share of equities in the portfolio to 61.2 percent by the end of the year from 58.7 percent a year earlier, capitalising on a bull market.

The oil fund, which invests Norway's surplus oil wealth, holds around $140,000 for each of the country's 5 million citizens. It is expected to growth to $1.1 trillion by 2020 and record investments into the sector indicate plenty of income beyond the end of the decade.

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