The surveys of 56 leading investment houses in the United States, continental Europe, Britain and Japan showed a typical balanced portfolio held 6.6 percent of its assets in cash, its highest since at least December 2010, from 6.4 percent last month.

The polls also showed exposure to stocks rose to 51.3 percent, the highest since July, from 50.6 percent, led by U.S. and Japanese investors.

Bonds fell to 34.3 percent from 35.3 percent, the lowest since March.

"Despite the more lackluster prospects for economic growth next year, we are positive on the longer-term prospects for equities, reflecting low valuations and the relatively strong financial positions of many companies," said Alec Letchfield, Chief Investment Officer, Wealth at HSBC Asset Management.

"However, further volatility is likely and downside risks remain in the event of another escalation of the euro zone crisis."

Within equities, Britain and emerging Asia gained in popularity, while allocation to North America and euro zone stocks fell.

The global equity market, measured by MSCI, is winding down a volatile 2011 with a year-to-date loss of more than 12 percent, which has lowered valuations across the board.

"There are compelling valuations in the U.S. stock market," said Steve Bleiberg, president and chief investment officer of Legg Mason Global Asset Allocation.

"Look at all thee asset classes and you'll see that bonds aren't yielding very much while the valuation and dividend yields on stocks are hard to pass up."

In their fixed income portfolios, investors cut allocation to government debt to 51.3 percent — its lowest in at least a year — and increased exposure to high yield bonds to 14.7 percent.

US ECONOMY IMPROVING

U.S. money managers rebuilt their equity holdings in December to the highest this year on signs of a strengthening U.S. economy. The poll Of 12 fund managers showed firms boosting their equity allocations for the second month in a row to an average of 66.8 percent.

Continental European funds increased cash holdings to their highest level in 2011 while they cut bond holdings as they sought to protect their portfolios from risks including sovereign defaults and a euro zone break-up.

The survey of 17 Europe-based asset management firms outside Britain showed a typical balanced portfolio held 10.5 percent of its assets in cash, up from 9.9 percent in November and nearly double the level seen in December 2010.

They left equity weightings at 44.0 percent, unchanged from November -- which was the highest level since July.

Japanese fund managers raised their global stock weighting for the first time in three months and cut their bond allocation as upbeat U.S. data and European steps towards resolving the region's debt crisis lifted risk appetite.

The poll of 12 Japan-based institutional investors showed their average equity weighting rose to 45.6 percent from 44.7 percent in the previous month, moving back towards a nine-month high of 47.1 percent hit in September.

British fund managers raised cash allocations and cut exposure to stocks as an investor flight to safety gathered pace due to the escalating European debt crisis.

A survey of 15 investment managers showed average cash allocations in global balanced portfolios jumped more than 1 percentage point to 10.4 percent in December, the highest level for more than a year.

Reuters also issued two similar polls from China and Italy, neither of which was included in the global calculations.

Italian fund managers were slightly overweight cash and have trimmed back bond allocations. The survey of 13 Italy-based asset management firms showed cash exposure inched up on average to 9.4 from 9.1 percent in a typical balanced portfolio.

Chinese fund managers raised their suggested equity weightings for the third month in a row, betting on a rebound that could be triggered by looser monetary policy.

The average recommended stock weighting over the next three months rose to 84.4 percent from last month's 83.6 percent, according to the poll of eight China-based fund managers.