Norway oil fund remains on prowl for stocks

By John Acher and Wojciech Moskwa

OSLO (Reuters) - Norway's $300 billion (£201.12 billion) sovereign wealth fund will remain a big buyer of equities after raising its holdings to 1.25 percent of European stocks and about half that proportion in markets elsewhere, its chief said.

Commonly known as "the oil fund", the Government Pension Fund -- Global invests Norway's oil and gas wealth in foreign stocks and bonds for when the "black gold" runs out. It held 0.77 percent of Europe's stocks at the end of 2007.

Executive director Yngve Slyngstad said in a briefing for foreign correspondents on Thursday that the current market weakness was an opportunity for the fund, which is boosting its equity allocation to 60 percent of total assets from 40 percent.

"We are slightly above 50 percent (in equities), so we will continue to be large buyers over the nearest months," Slyngstad said. "We have had a massive increase in our ownership stakes this year."

"These market circumstances suit us very well, we are a large buyer in a market with more sellers than buyers," he said.

Slyngstad said the fund was raising its equities allocation by investing much of its inflows -- which have totalled some 400 billion Norwegian crowns over the past 12 months -- in stocks rather than by selling heavily out of bonds.

"We have had a stabilising effect (on the markets) to the extent that at least there's one buyer out there," he said.

Despite the huge inflows this year, generated by record high oil prices, the fund's overall value has stayed nearly unchanged at around 2 trillion crowns due to weak global markets. A weaker crown has supported its value in local currency in past months.  Continued...