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U.S. equities raised to 40.8 pct, highest since March
* Euro zone bonds cut to 28.9 pct, lowest since June
* Only 38 pct see Fed, ECB and BoE tightening by year-end
* For poll data: reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/asset-allocation-polls
By Claire Milhench
LONDON, Oct 31 (Reuters) - With U.S. stock markets climbing to new highs in October, global investors raised U.S. equity holdings to seven-month highs, a Reuters poll showed on Tuesday, encouraged by strong corporate earnings and the revival of U.S. tax-cut plans.
The monthly asset allocation survey of 51 wealth managers and chief investment officers in Europe, the United States, Britain and Japan was conducted between Oct. 16-27.
During this period, U.S. tax-cut plans passed a key legislative hurdle, reviving hopes that corporate America would reap the benefits.
That helped U.S. stocks scale new highs in October, boosted also by better-than-expected company earnings and upbeat third- quarter U.S. growth numbers. The Nasdaq tech index looks set to end the month over 3 percent higher, and the Dow Jones is up 4.5 percent.
Not surprisingly, global investors' exposure to U.S. stocks rose 2.1 percentage points in October to 40.8 percent of their global equity portfolios, the highest level since March.
While overall equity exposure dipped a touch to 47.5 percent of global balanced portfolios, investors remained upbeat.
"It has been more than eight years since the March 2009 low and yet we still see few signs of the imbalances that usually signal the end of a bull market in equities," said Trevor Greetham, head of multi-asset at Royal London Asset Management (RLAM).
"At some point, a sustained rise in inflation will trigger a concerted effort by central banks to tighten monetary policy, but we're not there yet."
Only 38 percent of poll participants who answered a question on the U.S. Federal Reserve, European Central Bank and Bank of England thought all three would tighten monetary policy by the end of the year.
Although the Fed was widely expected to raise rates again in December, respondents disagreed about the path the ECB and BoE would take.
In late October - after most participants had filled in the poll - the ECB said it would cut its bond purchases in half from January. But it did extend the scheme until the end of next September.
"Tapering is not tightening," Greetham said.
As for the BoE, Sandra Crowl, a member of the investment committee at Carmignac, noted the bank had a juggling act to perform - inflation is rising while weaker investment and consumer spending are cutting into growth.
EURO ZONE CUT Within global bond portfolios, investors cut holdings of euro zone debt by one percentage point to 28.9 percent - the lowest since June - while trimming UK gilts to 9.9 percent.
Emerging market debt remained in favour, its share in portfolios up 1.2 percentage points to 12.1 percent.
Poll participants were split 50/50 on whether a new German finance minister would loosen the country's fiscal policy, after Wolfgang Schaeuble agreed to step aside.
"The Germans are (somewhat rightly) terrified that the current policy of the ECB is way too loose for them," said Mouhammed Choukeir, chief investment officer at Kleinwort Hambros. Their only way to offset that loose monetary policy is with a prudent fiscal policy, he said.
However, Peter van der Welle, a strategist at Robeco, said that Germany's current budget surplus and sturdy economy provided a benign backdrop for a new governing coalition to pursue a less restrictive fiscal policy.
There was little consensus on whether the impasse in Brexit negotiations made a hard Brexit - one without a trade deal - more likely. Half of those who answered a special question on the subject thought it would.
David Vickers, senior portfolio manager at Russell Investments, said that after a disastrous election result for the Conservatives, the general view was that Brexit would only get softer.
"We view the impasse as transitory as the UK government will likely be more conciliatory in negotiations and be willing to make concessions," he said.
But others, such as Martin Wolburg, senior economist at Generali Investments, noted several hurdles ahead, including the exit bill, the Northern Ireland border issue and European Union citizens' rights in the post-Brexit Britain.
"If no progress towards a deal is made in December, investors are likely to price a significantly higher risk of no deal," said Jan Bopp, asset allocation strategist at J Safra Sarasin. (Reporting by Claire Milhench, Maria Pia Quaglia Regondi and Hari Kishan, editing by Larry King)