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UPDATE 1-Norway's wealth fund gives reasons for energy shares decision

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OSLO, Nov 28 (Reuters) - Norway's $1 trillion sovereign wealth fund said it found no significant differences in expected return for oil and gas shares and the market as it set out more details of its plans to cut investments in energy companies.

The world's largest sovereign wealth fund this month proposed dropping oil and gas shares from its benchmark index, sending energy stocks lower.

"It might be beneficial for an investor that already has substantial oil price exposure outside their financial portfolio, not to add to this exposure by investing in oil and gas stocks in their financial portfolio," the fund said in a discussion note.

If adopted by parliament, the fund would over time divest billions of dollars from oil and gas stocks, which now represent 6 percent -- or around $37 billion -- of its benchmark equity index.

The aim is to make the fund less vulnerable to a permanent drop in oil prices when it is increasing its exposure to equities to 70 percent of total value from 60 percent earlier.

In addition to its holdings via the fund, Norway has its own exposure to oil and gas through untapped offshore hydrocarbon reserves, as well as its 67 percent stake in the national oil company, Statoil.

The Statoil stake is held directly by the government and will not be affected by any sale by the fund, which is managed separately. (Reporting by Gwladys Fouche; Editing by Terje Solsvik and Keith Weir)