Japan household shift from safe deposits a slow one

TOKYO, Feb 27 (Reuters) - Japanese households prefer deposits and safety when choosing investments but are slowly shifting funds into riskier assets, a survey by the Central Council for Financial Services Information showed on Wednesday.

Households with more than two persons held an average 12.59 million yen ($117,400) of financial assets in 2007, up from 11.19 million yen the year before, according to the annual survey conducted in October and November.

Deposits accounted for 53 percent of financial assets, down from 54 percent in 2006. Securities holdings -- including stocks, bonds and investment trusts -- rose to 19 percent in 2007 from 16 percent the year before.

Nearly half of respondents, or 46.5 percent, cited safety as the top priority in choosing financial assets. Liquidity and profitability were cited by 28 percent and 16.5 percent, respectively.

In the past few years Japanese investors have turned to foreign assets like New Zealand bonds and Chinese stocks, trying to earn better returns than they can get at home where interest rates are very low and the equity market has underperformed others.

That steady buying of foreign assets contributed to the yen's JPY= EURJPY=R broad weakness that pushed the Japanese currency to a decade low on a trade-weighted basis last year.

But the survey showed the slide in global stock markets and flare-up up financial market volatility in the last six months has taken a toll, with household interest in securities for future investments flattening out after a steady rise.

Japanese households still hold funds in cash and low-yielding deposits totalling 770 trillion yen ($7.2 trillion). A separate survey of single-person households showed a higher proportion of securities investments in their financial assets, at 35.8 percent. At multi-person households, deposits accounted for 40 percent of assets.

The single-person households were also more balanced in their investment priorities, with safety accounting for 31.7 percent, followed by 30.5 percent for profitability and 27.7 percent for liquidity.

(Reporting by Chikako Mogi; Editing by Eric Burroughs)