* China Investment Corp says not cutting Europe investments
* Says Europe should be more open to foreign investment
* Says weighting high in U.S., Europe, eyeing emerging mkts
(Adds background, more quotes)
By John Irish
PARIS, May 26 (Reuters) - China's sovereign wealth fund will not cut its investments in Europe despite the fall in the euro, but will closely monitor how the continent tackles currency and regulation issues, the fund's head said on Wednesday.
"We will keep our allocation in Europe," China Investment Corporation president and chief investment officer Gao Xiqing said at a the Organisation for Economic Co-operation and Development (OECD) 2010 Forum in Paris.
"For a while, we were debating whether to underweight Europe, but our conclusion probably is not to underweight it," he said.
Sovereign funds, which together manage around $3 trillion of assets, are becoming more aggressive after turning cautious in 2008 at the height of the credit crisis when they lost billions on banks such as UBS and Citigroup.
Gao said Europe remained a very important market, albeit with problems, and CIC would have to look carefully whether or not policies in the European Union on currency and regulations would allow a return to previous growth rates.
CIC was set up in September 2007, with the aim of seeking higher returns for part of the country's massive stockpile of foreign exchange reserves, which stood at $2.39 trillion at the end of 2009.
It has invested $110 billion since then taking its assets under management to about $300 billion and has a minimum investment of $100 million, Gao told reporters.
"(Our weighting) depends on the overall GDP growth, so we're actually higher in North America and Europe if you count it by GDP calculation," Gao told reporters, calling its weighting in those areas "too high."
He said the fund was looking at emerging markets including in Latin America and the Middle East and was open to sectors other than military manufacturing, gambling and tobacco.
SPECTRE OF COMMUNISM
He said Europe needed to open itself more to foreign investors to spur growth, joking that the "spectre of communism" seemed still to be haunting the continent.
Referring to a line from Karl Marx's "Communist Manifesto", Gao said Europe appeared to be embracing greater state control just as China was freeing up its markets.
"Karl Marx said the spectre of communism was haunting Europe," he said. "Now we see that at a time when our country is trying to go your way (with capitalism)," Gao, a former factory worker, said.
Among its huge portfolio, it is reported to have invested in property, infrastructure, natural resources, U.S. mortgages and distressed assets this year.
Some of the world's biggest state funds from Asia, Kuwait and Norway said at a summit last November they were one of the few sources of long-term capital prepared to ride out bouts of market volatility amid a still uncertain global recovery.
But Gao said the fund faced considerable suspicion from western governments concerned that it could be positioning itself to gain control over strategic sectors.
"We never seek to control an industry or enterprise, but we found governments saying covertly you better not invest because we are afraid of you," he, said, pointing especially to Europe.
(Editing by Mike Nesbit and Elaine Hardcastle)