2014@ (For other news from Reuters Global Investment Outlook Summit, click on http://www.reuters.com/summit/Investment13)
LONDON, Nov 19 (Reuters) - Top investment managers expect further monetary easing from the European Central Bank in 2014 to support the euro zone economy at a time when the Federal Reserve is set to withdraw stimulus in the United States.
Participants in the Reuters Global Investment Outlook Summit - who collectively manage assets of over $2.6 trillion - said the ECB was unlikely to use Fed-style quantitative easing.
Instead the ECB was likely to provide more cheap long-term funding to encourage banks to increase lending into the economy, a number of participants at this week's summit said.
"One of the main issues is the delivery of credit to the economy," said Arnaud de Servigny, chief investment officer of wealth management at Deutsche Asset & Wealth Management.
"The leeway to act if it were needed, at the ECB level, is higher than what people might think. I don't think that quantitative easing is in scope, at the moment."
The Organisation for Economic Cooperation and Development called on the ECB on Tuesday to consider buying government and corporate bonds to help avoid a deflationary spiral. ECB Vice-President Vitor Constancio said the bank had discussed the possibility of QE but no technical planning had taken place, though he added that "everything is possible".
Goldman Sachs Asset Management, Pioneer Investments and ING Investment Management's top investment chiefs said it was possible the ECB would launch another Long Term Refinancing Operation next year.
The ECB already injected over a trillion euros ($1.3 trillion) into markets through two LTROs in December 2011 and February 2012 to prevent a credit crunch. These loans must be repaid by early 2015, meaning a new LTRO will be needed if the ECB wants to maintain supplies of cheap long-term credit.
"The LTRO is necessary to keep easy conditions in the financial system while the recovery takes place. QE in Europe is very difficult to conceive ... from a political point of view," Pioneer's CIO Giordano Lombardo said.
Germany remains particularly opposed to the ECB buying government debt.
Lombardo also said another controversial move would be for the ECB to cut its deposit rate to negative from zero at present, meaning commercial banks would have to pay to park funds at the central bank overnight.
The ECB surprised markets last week by lowering its main refinancing rate by 25 basis points to 0.25 percent following a sharp fall in euro zone inflation.
However, all of the summit participants said Europe was likely to avoid a Japanese-style deflationary spiral.
EQUITY JUICE RUNNING OUT
Top investors were staying clear of core government debt, expecting benchmark U.S. Treasury yields to rise between 100-200 basis points over the next year or so.
U.S. Treasury yields shot up to near 3 percent earlier in the year after the Fed suggested it would start to scale back the pace of its money printing.
But the rise was unlikely to kill off risk appetite. The participants were still bullish on equities, expecting annual returns of up to 15 percent, but valuations were getting rich given 20-percent-plus gains this year.
"Valuations feel quite peaky ... I don't think the market is going to be up 20 or 25 percent like this year and I definitely think we're going to have setbacks," said Chris Goekjian, CIO of hedge fund Cheyne Capital.
Most participants were cautious on emerging markets, after volatile moves this year when the Fed's suggestion of stimulus withdrawal encouraged investors to pull funds away from the sector.
Goekjian saw an end to the trend of emerging markets outperforming other markets. "You can either say it's slowed down or it's ceasing," he said. "We think that effectively you are going to see the continued outperformance of developed markets over emerging markets."
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(editing by David Stamp)