Investors are "purging" commodity holdings in favour of food stocks as recession has overtaken inflation as a major source of concern, a Merrill Lynch survey has found.

The balance of global fund managers overweight on commodities has plunged from plus two points to minus 19 points over the last month, the lowest reading since at least 2005, the survey said. Much of their favour was redirected towards equities in consumer staple companies, with the balance of investors overweight in the sector reaching a five-year high.

The trend was particularly marked among European managers, who ended their historic distaste for food and beverage stocks, which they have traditionally kept at "large underweight", Merrill Lynch said. Bonds and pharmaceuticals stocks also benefited.

Karen Olney, Merrill Lynch's lead European equities strategist, said: "European fund managers are migrating towards lower risk industries - feasting on food and beverages while purging positions in commodities."

The sector's popularity reflected a spike to 68% in the number of European fund managers expecting recession in the next month, compared with 41% in the August survey. The proportion forecasting higher European inflation, a majority concern as late as June, dropped to 12%.

"Investors care little about inflation with recession on their doorstep and the banking system under pressure", Ms Olney said.

The survey was completed after the US Federal Reserve's rescue of Fannie Mae and Freddie Mac, the stricken mortgage lenders, but before the collapse of Lehman, the investment bank, on September 15, and the rescue of insurer AIG.

Emerging markets, whose industrial sectors are particularly weighted towards mining, had felt the switch out of commodities and basic resources shares particularly hard. The proportion of fund managers underweight in emerging market stocks reached its highest since 2001.

However, Michael Hartnett, Merrill's chief global emerging markets strategist, forecast "an improvement in sentiment" towards the region's equities once commodity prices stabilised and central banks loosened monetary policy to revive economic growth.