See table for survey breakdown

TOKYO, Oct 31: Japanese fund managers pushed their allocation for euro zone bonds to the highest level in 10 months as yields stabilised, but cut their overall exposure to bonds from last month�s record high as risk appetite revived, a Reuters poll found.A survey of 10 Japan-based fund managers, polled between Oct. 17 and 24, showed allocations for euro zone bonds against those from other regions up at 22.2 percent, the highest rate since December 2011.�We believe the ECB�s commitment to purchase Southern European government bonds regardless of their rating strongly underscores the downside of the asset class,� said Yoshino Akio, chief economist at Amundi Japan.Bond yields in highly indebted Spain have come down since hitting euro-era highs in late July, but remain rewarding enough to entice yield-hungry Japanese investors, who reduced their holdings of domestic debt to a 10-month low of 38.2 per cent.In another sign of improved risk appetite, bond allocations versus other asset classes dropped to 52.2 percent from a record high of 53.3 per cent in September, while equity allocations inched up to 41.2 per cent from 39.2 percent last month.�There�s still little space to be optimistic about the global economy, but there are signs that the problems are bottoming out,� said Kenichi Kubo, senior fund manager at Tokio Marine Asset Management.However, equity allocations remain below last year�s average of 44.4 percent and 45.7 per cent in 2010, while bond allocations are still at their second-highest level since the survey began in 1995.�The flight to quality is still continuing, and it is hard to see when that situation will reverse,� said one fund manager who declined to be identified.�However, interest rates are beginning to go up...I also expect the yen to ease slightly, although it will take some time before it makes a move like back in February,� he continued, referring to the currency weakening to 84.17 yen to the dollar on March 15 from 76 yen on Feb. 1.The yen softened to a four-month low of 80.36 against the dollar on October 26 due to improved risk appetite on strong US data, signs that the pace of China�s slowdown is dropping, and expectations of further easing from the Bank of Japan.(agencies)