Global fund managers fretting over fiscal cliff (by Barbara Kollmeyer)

MADRID (MarketWatch) -- Global fund managers are growing more positive about the global economy, but at the same time more concerned about the impact of the U.S. fiscal cliff, according to the Bank of America Merrill Lynch fund manager survey for October. Nearly three-quarters of fund managers believe the fiscal cliff isn't priced into equities or macroeconomic data sufficiently. It was identified as the number one tail risk by 42% of respondents, up from 35% in September, and 26% in August, the survey said. Managers view the European sovereign debt crisis as less of a threat, with some 27% of those surveyed seeing it as a number one risk, down from 33% a month ago. A net 20% of investors now believe the global economy will strengthen in the next year, while corporate profit worries are also down. Equity allocations were also significantly up on a monthly basis, with managers putting more money into banks and industrials, though they moved into risk-averse mode over Japan. Investors have gotten more bearish on Japan as concerns grow over a dispute with China and its impact on trade.