* Global equities may correct, Japan outlook positive
* 5-10 pct correction in equities wld offer buying opportunity
* Chinese reforms, FX liberalisation favour Chinese corporates
* For a video on this story, see http://reut.rs/1b9WE5f
LONDON, Nov 21 (Reuters) - Baring Asset Management has switched to neutral from overweight on European and U.S. equities but remains bullish in the longer term, and would see a 5-10 percent pullback as a buying opportunity, its chief investment officer said.
Japan is the UK fund house's favourite stock market for now.
Rallies in global stocks, especially in the United States and Europe, have started to outstrip earnings growth, a warning sign that a price correction may be coming, Marino Valensise told the Reuters Global Investment Outlook Summit on Thursday.
"We are pro equities because we think that growth is going in the right direction," Valensise said, adding that governments were likely to continue to support markets.
"At the moment we tactically put equities from overweight to neutral as a very, very short-term measure - if you see a correction of 5, 10 percent, that will be another chance to get into the markets."
Japan's "Abenomics" model of flooding domestic markets with liquidity would continue to support Japanese stocks and outweigh the negative market impact of any reduction next year in the U.S. Federal Reserve's $85 billion-a-month bond-buying programme, Valensise said.
Barings, which has $60 billion under management, remains overweight on Japanese equities, with monetary easing likely to support Japanese exporters, Valensise added.
"It is obviously a fascinating experiment there. I am probably for the first time in my life more positive than negative, I think that it could work. The Japanese equity market, although it has done very well, is still our favourite market right now."
But Valensise said German and South Korean exporters may lose out to Japanese export growth.
In China, the rapid pace of economic liberalisation, particularly on the yuan currency - also known as the renminbi - and more reforms promised at this month's Communist Party policy meeting, meant Chinese stocks looked attractive.
The onshore Chinese "A" share market was "unloved and undervalued", Valensise said, calling it one of his top picks for next year.
"Everyone hates the China market, everyone is underweight, and no one wants to talk about it," he said.
"I would say that the beneficiaries of the internationalisation of the renminbi should be corporate China and exports."
Market liberalisation would likely enable the onshore Chinese stock market to enter the benchmark MSCI emerging stocks index within the next few years, magnifying China's weighting in the index and adding to its appeal, Valensise said.
Valensise also said U.S. Treasuries could be a buy if long-term yields rise a little further.
He told the Reuters Global Markets Forum: "If U.S. Treasury 10-years reach 3.25 percent, I would start buying as I think (at this level) the curve is very steep and anticipates rate rises which will never materialise."
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(Additional reporting by Shadi Bushra, Axel Threlfall and Amanda Cooper; Editing by Susan Fenton)