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LONDON (Reuters) - Sovereign wealth funds (SWFs) -- the investment arms of cash-rich nations such as China and Qatar -- are poised to raise their holdings of commodities and oil in a move that could have a huge impact on financial markets.

Sitting on up to $4 trillion (2.7 trillion pounds) in assets, much of it from selling oil and other raw materials, most SWFs have so far been conservative in their investment choices, holding dollars, treasuries and shares in large U.S. and European companies.

But they have been badly burned by the global financial and economic turmoil over the last 18 months and are now looking at new strategies to protect their interests, analysts say.

As these funds switch into commodities and oil those markets will be supported by the sheer weight of their purchases.

Surveys suggest SWFs may now have between $10 billion and $20 billion in commodities and oil, but this underweight by most measures could rise rapidly to hundreds of billions of dollars.

http://uk.reuters.com/article/fundsNews/idUKLNE51N03220090224