OTTAWA (AFP) - Nervous Canadians are sitting on a record 45 billion dollars in cash instead of investing it, fearing volatility in stock markets, a Canadian bank said Wednesday.

As a result, they risk losing billions of dollars in lost investment opportunities, CIBC World Markets said in a report.

"Investors are in a bad mood," CIBC senior economist Benjamin Tal said in a statement. "With this heightened concern about the stock market, Canadians of all ages are more risk adverse and have sought asylum in the safety of cash."

"The rush into cash during periods of increased volatility is understandable," Tal noted.

But he also warned Canadians not to repeat mistakes of 1987 and 2001, when "Canadians sat on their cash for far too long after the markets rebounded" and missed out on stock market gains of more than 20 percent.

The CIBC report found that a whopping 35 billion dollars (Canadian, US) worth of equity funds in Canada had been cashed out in the last six months, and sales of equity mutual funds are now in negative territory.

Meanwhile, sales of money market funds are booming, with cumulative net sales over the past six months rising eight times faster than during the same period last year.

Canadian households' cash holdings are now rising at a year-over-year rate of 15 per cent -- the fastest pace in more than six years -- and the value of Canadians' personal liquid assets is at a record high.

As well, Canadians aged 25 to 49 years, typically less risk adverse than older folks, "surprisingly" contributed almost 40 percent of the current liquidity reserve, Tal said.

"Clearly, safety is in these days," he commented.

"The anxiety about the stock markets also worked to reacquaint Canadians with their checking and savings accounts, with balances currently rising at over seven percent on a year-over-year basis."

The report attributes part of the increase in cash holdings to the fact that back in 2001 some of the money younger investors took from the stock market went into real estate.

With soaring home prices in Canada, this option is less attractive or affordable today, it says.

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