Behind the bullish view was a series of interest rate cuts from the world's central banks and confidence that the U.S. economy would be unscathed by the ongoing crisis in Brazil.

"There is more optimism all round," said Trevor Greetham, global strategist at Merrill Lynch.

"The most dramatic upturn is in the U.K. where a third [of respondents] expect a stronger economy on a year's view compared with just three percent back in September," he said.

The survey polled 297 leading institutions managing $6,252 billion between Jan. 29 and Feb. 4.

Greetham added, "It is interesting to see how quickly the agenda is shifting from 'will there, won't there be a recession in 1999?' to 'how strong will the upturn be in 2000?'.

One-in-three British fund managers expect an improvement in the general domestic economic situation in a year, compared to 13 percent a month ago and three percent in September encouraging them to buy stocks at home and abroad while selling bonds.

Elsewhere, he said, the most interesting development was that U.S. fund managers did not expect the Brazilian devaluation to have an impact on their economy.

"Eight out of 10 don't expect any impact on the economy or profits so the general view is this global crisis is doing nothing for the U.S. other than lowering its interest rates," Greetham said.

"As a result we are getting stronger and stronger growth."

Nine out of 10 U.S. fund managers expect global deflationary pressure to have only a marginal effect on the U.S. economy while 90 percent expect no impact from Brazil.

The average forecast for 1999 U.S. gross domestic product growth was 2.8 percent, compared with 2.2 percent a month ago. "The U.S. economy survived the Asia crisis and the Russia crisis. It is no surprise that most U.S. fund managers expect it to weather the storm in Brazil," said Trevor Greetham, global strategist at Merrill Lynch.

Japanese investors were also more optimistic about their economy, buying local equities and selling Japanese Government Bonds (JGBS), the survey showed.

This went against the view that the yen was strengthening because JGB yields were high and it was attracting money back home, said Greetham.

"Our survey [shows] the Japanese are big sellers of bonds and they are buying equities," said Greetham.

"So what they are doing is bringing money back home, but not to buy bonds but to buy equities," he said, adding that they were their least bearish on bank shares since that sector was included in the survey.

However in Europe, the rosier view of the world economy had encouraged investors to increase equity weightings in Britain, the United States and Japan at the expense of European assets.

Only a 58-percent balance of respondents were bullish for Europe compared with 79 percent in January.

Some of the sheen came off the Euro too which was the most popular currency with 70 percent of respondents in Europe, but compared with 82 percent in January.

Even so, over half the European investors in the survey expected the European Central Bank to cut interest rates in the coming 12 months.

Greetham saw some early warnings that the overall focus of fears may be shifting toward the threat of inflation.

"There is maybe the beginning of a feeling that inflation may start to rise in the U.S. sometime this year and maybe the Fed will raise rates this year," he said.

"You now have one-in-three fund managers expecting the next move in Fed funds to be up not down," he said.