Global funds favour euro stocks for 1st time in 2 yrs-BofA poll

LONDON, Dec 18 (Reuters) - Global investors prefer euro zone shares to U.S. ones for the first time in two years as concerns of a major risk event in the single currency bloc ease, a fund managers' survey showed on Tuesday.

A net seven percent of investors positioned themselves overweight euro zone equities in December, up from net one percent in November, Bank of America/Merrill Lynch (BofAML) said in its monthly asset allocation survey.

This compared to a net five percent of investors overweight U.S. equities, putting euro zone stocks ahead of U.S. stocks for the first time since November 2010.

Concerns about the euro debt crisis receded for the seventh consecutive month, the poll showed.

Of the 255 panelists with $664 billion of assets under management surveyed in the Dec. 7-13 poll, 22 percent cited the crisis as the biggest risk factor, down from 65 percent in June.

"The positioning of overweight European (equities) ...has tracked very closely with the decline in risk, or perception of risk, for Europe," said John Bilton, European Investment Strategist at BofAML.

"For us to move into a new phase in 2013 the risks will need to come down further, but we need to see European stocks decoupled from this and recoupled instead to their valuation call because they are still very cheap relative to the U.S.," Bilton said. "For that, investors need to have confidence that corporate earnings really can begin to pick up again as we go into 2013."

Cash and bond allocations dipped, with investors in the poll more optimistic about the global economy as growth expectations hit a 22-month high.

A net 41 percent of investors are underweight bonds, the lowest level in eight months, while cash allocations hit a nine-month low at net 12 percent overweight.

(Reporting by Alice Baghdjian; Editing by John Stonestreet)