INTERVIEW, UPDATE 2-PIMCO says too early for emerging markets

* Bond fund manager to focus on quality credits in Europe, US * Seeks credits supported by policymaker actions

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By Kevin Plumberg

HONG KONG, Jan 7 (Reuters) - PIMCO, the world's largest bond fund manager, is still slashing its exposure to emerging markets and prefers high-grade investments in Europe and the United States, the firm's Asia chief executive said on Wednesday.

PIMCO is focussed on investing in quality credits that are supported by policymaker actions, rather than bargain hunting in riskier markets, Brian Baker, director of PIMCO Asia Limited, told Reuters in an interview.

"That means more towards the U.S. and Europe and away from the corporates here in Asia, which are still very reliant on export-led growth. The policy support here in Asia would be more toward equity markets than fixed income," he said.

Assets under management at the Singapore and Hong Kong offices were approximately $15.4 billion as of September 2008. The firm as a whole manages $790.3 billion, according to the company's Website.

Hopes that massive government spending and aggressive central bank interest rate cuts will support the global economy have sparked the longest rally in world stock markets in four years and brought Asian credit spreads to the narrowest in almost four months.

However, given the severity of having European, Japanese and the U.S. economies all fall into recessions at the same time, now is not the time to deviate from an admittedly conservative investment strategy, Baker said.

"All policymakers acknowledge that it's going to be a long road to recovery, so you have to make sure you don't get into those risk positions too early," he said.

PIMCO, a unit of Allianz SE whose chief investment officer Bill Gross is one of the industry's most widely watched figures, shifted to buying U.S. Treasuries and some investment-grade mortgage debt last year and has not looked back since.

The firm's cautiousness on Asia contrasts with other global fixed income investors like Western Asset Management, a unit of Legg Mason, which is bullish on regional corporate bonds.

Even after Brazil, Colombia and the Philippines offered sovereign bonds this week, suggesting a thaw in capital markets, Baker said the risk of uncovering other credit landmines outweighs the opportunity to scoop up a bargain.

Uncertainty about the outlook for risk caused PIMCO to postpone the launch of an Asian local currency bond product until 2010 at the soonest so the firm can assess the demand.

"We're moving to a new paradigm. We're not going to be able to hit the reset button and go back to where we were," Baker said.

(Editing by Sharon Lindores)