* Says tax evasion an increased concern for investors
* Share of stocks rises to 63.4 pct from 62.4 pct in Q1
* Sharply cuts UK government bond holdings, raises Japan
By Gwladys Fouche and Joachim Dagenborg
OSLO, Aug 9 (Reuters) - Norway's $760 billion oil fund, the world's biggest investor, said on Friday tax evasion was a growing concern which it may have to address in future.
Tackling corporate tax evasion has become a hot political issue internationally, with the European Union estimating that hundreds of billions of euros are lost each year at a time when member countries are trying to cut their public deficits.
"Tax evasion was not an area of focus before for us. But this is a theme that we follow closely," Yngve Slyngstad, the fund's chief executive, told Reuters. "It could be an interesting area for us to focus on in the future."
The fund, which invests Norway's vast surplus of oil money, has investments in some 7,500 companies worldwide and adopts an ethical profile.
It bans investments in some industries - tobacco, nuclear arms, anti-personnel landmines and cluster bombs - and focuses on issues such as children's rights or the equal treatment of shareholders when discussing with the firms it invests in.
Speaking after presenting the fund's quarterly results, Slyngstad said tax evasion was a worry for all investors.
"Tax evasion has been an increased concern not just for politicians, but also for investors," he said, noting efforts to overhaul international standards.
To increase its clout as a major investor, the fund also said it was establishing a Corporate Governance Advisory Board, seeking advise on active ownership and input on board nomination practices.
DOWN ON UK, UP ON JAPAN
In the second quarter, the fund increased its holdings of stocks, sharply reduced its British bond holdings and picked up more Japanese government debt.
It raised the share of equity holdings to 63.4 percent from 62.4 in Q1, marking an almost 4 percentage point jump from a year earlier, on expectation for accelerating growth in the United States.
"Equity returns were boosted by strong markets in the U.S. and Japan, while emerging markets pulled in the other direction," said Slyngstad. "Fixed-income returns were undermined by a rise in global yields."
It took a sizeable hit on emerging markets investments.
Among the biggest changes in its portfolio, the fund cut its British government debt holdings by 26 percent to 42.9 billion crowns ($7.26 billion) and increased its Japanese government bond holdings by 30 percent to 129.5 billion crowns.
Nestle remained the fund's biggest equity holding with a stake worth 38.2 billion crowns while Royal Dutch Shell moved to second place from third with 28.6 billion.
The fund returned 0.1 percent in the second quarter, beating its own benchmark index by 0.3 percentage points, as fixed income investments returned -1.4 percent and equities returned 0.9 percent.
Equities in emerging markets returned -5.9 percent in the second quarter, due to a fall in commodity prices brought about by slowing growth in China and several central banks in emerging markets, like Indonesia and Brazil, tightening monetary conditions.
Worth about $150,000 for each of Norway's 5.1 million residents, the fund holds about 1 percent of all global equities. The Norwegian government expects the fund's investments to reach $1.1 trillion by 2020.