UPDATE 1-Norway's wealth fund should not expand to unlisted firms -government

* Norway fund is world's largest SWF

* Invests in stocks, bonds, property abroad

* Graphic: http://tmsnrt.rs/2tskfub (Adds quote, bullets, pix, graphic)

OSLO, April 10 (Reuters) - Norway's $1 trillion sovereign wealth fund, the world's largest, should not be given a general permission to invest in unlisted companies, the Nordic country's finance ministry said in recommendations to parliament on Tuesday.

The fund invests Norway's oil and gas revenues into stocks, bonds and property abroad. The fund is one of the world's biggest shareholders, with stakes totalling 1.4 percent of all listed companies.

"Unlisted equity investments would challenge the management model based on transparency, low management costs, and a limited degree of active management," the Finance Ministry wrote.

The fund has argued that investing in unlisted shares, primarily via private equity funds, could help improve its tradeoff between risk and return.

It already has permission to take stakes in firms that have a clear intention to list however, which it can still exploit, the ministry said.

(Reporting by Gwladys Fouche, writing by Terje Solsvik, editing by Ole Petter Skonnord)