POLL-China funds lift equity weighting to record high

* Equities weighting hits 88.3 pct, highest since poll began

* Strong economy, capital inflows seen upside to stocks

* Risks from policy uncertainty, capital fund-raising

* Bond/bill weighting sags to record low 2.6 pct from 6.1 pct

SHANGHAI, Nov 30 - Mutual funds in China raised their recommended weighting for equities to 88.3 percent in the latest monthly Reuters poll of fund managers, the highest since the survey began in June 2007, encouraged by a buoyant economy and foreign capital inflows.

The weighting was up sharply from the previous survey's 84.4 percent, while recommended weighting in bonds and bills was cut to 2.6 percent, the lowest ever for the survey and down sharply from the previous survey's 6.1 percent.

Cash was lowered to 9.1 percent from the prior survey's 9.4 percent.

The poll of nine China-based funds, taken over the past week, also raised the range of forecasts for the Shanghai Composite Index, the mainland's benchmark stock index, in three months' time to 3,200 to 4,500 points from the previous survey's range of 3,200 to 4,000.

The Shanghai index was at 3,174.493 points at midday on Monday, up nearly 75 percent since the start of the year.

The index tumbled 6.4 percent last week, however, in its worst weekly performance in three months, due in large part to worries about potential capital-raising by banks which could bring substantial supplies of new shares to the market.

Those worries spurred profit-taking and led many investors to pull out of the market.

The fund managers emphasised that the greatest risks for the stock market were fund-raising pressures and policy uncertainty, with an annual central economic meeting due to be held soon that will set the tone for economic policies next year.

They added that the heated rise in asset prices this year had triggered worries about government intervention and monetary policy tightening.

Chinese banks are under government pressure to shore up their finances after a lending spree in the first half of the year, which could trigger a slew of new stock and bond offers to raise capital to boost their capital adequacy ratios.

China's authorities have also signalled concerns about rising asset prices, suggesting the possibility of steps aimed at clamping down on potential asset price bubbles that could affect the stock and property markets next year.

Among equities sectors, financials remained the most favoured, although the allocation was lowered to 21.1 percent from the previous survey's 22.3 percent.

The consumer sector was next with a weighting of 13.4 percent, up from 12.1 percent, with some fund managers noting that policies to stimulate domestic demand were likely to continue, lifting sales of consumer electronics and other goods more than had been expected.

For the bills market, eight fund managers gave an average forecast for the secondary market one-year central bank bill yield in three months' time of 1.9 percent, versus 1.8747 percent on Monday, according to Reuters Reference Rates. (Editing Jacqueline Wong) ((edmund.klamann@reuters.com; +86 21 6104 1799; Reuters Messaging: edmund.klamann.reuters.com@reuters.net)) ( -------------------------------------------------------- To see other polls in this series, click on: - Reuters British-based asset allocation survey - Reuters U.S.-based asset allocation survey - Reuters Japan-based asset allocation survey - Reuters Continental Europe-based asset allocation