OSLO, Oct 29 (Reuters) - Norway's $860 billion sovereign wealth returned just 0.1 percent in the third quarter, below the 3.3 percent three months earlier, as a strong performance by U.S. stock markets was offset by a weak performance in Europe, it said on Wednesday.
The fund, one of the world's biggest investors, said it slightly reduced its bond holdings in the quarter while real estate holding rose and equity holdings were slightly higher than three months earlier.
"Two quarters of strong returns were followed by a virtually flat quarter," Chief Executive Yngve Slyngstad said in a statement. "Increased geopolitical uncertainty in the vicinity of the euro area contributed to a negative return on European stocks."
"The U.S. on the other hand, emerged as the global growth engine, and U.S. stocks produced a positive return. The negative overall return on equities was cancelled out by a positive return on the fund's fixed income investment," Slyngstad said.
The fund's bond holdings fell to 37.3 percent of its portfolio from 37.6 percent three months earlier, while equity holdings rose to 61.4 percent of the fund from 61.3 percent.
"Europe was the weakest-performing region, with a return of minus 4.3 percent (for equities) measured in the fund's currency basket, and represented 43.6 percent of the fund's equity investments at the end of the quarter," the fund said. (Reporting by Gwladys Fouche, editing by Balazs Koranyi)