Investors are becoming increasingly concerned that the world is heading for a serious economic slowdown but are less concerned about the US and inflation, a Merrill Lynch survey showed on Wednesday.
The investment bank's August poll of 193 fund managers showed a shift in favor of U.S. assets with a more positive attitude towards the dollar.
Overall, the poll showed investors to be highly cautious and somewhat gloomy about the future.
"There is a more deep-seated concern about what is happening to the global economy," said David Bowers, Merrill's consultant on the monthly poll.
Some 48 percent of respondents, for example, said they considered it likely that the global economy would experience recession in the next 12 months, up from 41 in July and 34 percent in June.
Bowers said the mood had shifted as signs of slowing growth in Japan, Germany and the euro zone have increased.
Data released on Wednesday, after the survey was taken, showed Japan's economy contracted 0.6 percent in the second quarter,the sharpest rate in seven years.
The euro zone and German economies are also expected to have shrunk quarter-on-quarter in the April-June period.
One consequence of this is that the poll suggested inflation was a decreasing concern, in contrast to recent surveys that had shown price rises and stagflation as worries.
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Back in June, 59 percent of respondents said they expected higher inflation in 12 months' time. In Wednesday's survey, 49 percent said it would be lower.
This mood was particularly strong among European investors, whose inflation expectations, Merrill said, had fallen to lows not seen since 2001.
"Are people relying too much on the oil price decline?" Bowers asked.
The price of crude oil is down more than 9 percent so far in August and other high flying commodities have also eased.
The fall in inflation expectations fed into a lowering of expections for interest rates, according to the survey. Some 41 percent of respondents said they expected short-term rates to be lower in a year's time versus 27 percent who thought that in July.
The survey showed that investors have become more bullish on the dollar although polling closed before the currency's latest surge.
Sixty-three percent of respondents said the greenback was the currency most likely to appreciate over the next year on a trade-weighted basis, compared with 14 percent who picked the Japanese yen and just 9 percent who opted for the euro.
The euro had the least favourable prospects with 68 percent expecting it to depreciate the most.
The dollar bullishness and unfolding economic weakness in the euro zone and other areas put something of a shine back on to U.S. assets.
U.S. equities were the most popular bet for stock investors, trailed in order by emerging markets, Japan, the euro zone and Britain.