Pimco says Japan, U.S. debt losing investment appeal

"The main driver of underlying market moves is the outlook for the global economy rather than Japan's fiscal policy," Masanao told Reuters in an interview on Thursday.

Masanao also said a default on U.S. Treasuries would cause "quite a big shock" to global markets, although he expects the country to eventually avoid this happening.

Pimco has significantly reduced its holdings of U.S. Treasuries and slightly cut its investment in Japanese government bonds, Masanao said.

The move is aimed at shifting money to more attractive investment opportunities, such as debt issued by countries like Australia, Canada, Brazil and Mexico which are not faced with serious fiscal problems, he said.

Based in Newport Beach, California, Pacific Investment Management Company (PIMCO) is the world's largest bond fund manager with nearly $1.3 trillion in assets under management.

(Reporting by Leika Kihara; Editing by Michael Watson)