Norway's $1 trillion wealth fund should keep oil stocks: commission

OSLO (Reuters) - Norway's trillion-dollar sovereign wealth fund should continue to invest in oil and gas firms, a government-appointed commission recommended on Friday, contradicting earlier advice from the central bank.

A decision on whether to drop energy shares from the fund's benchmark index, and thus divest tens of billions of dollars from oil and gas stocks over time, is expected later this year.

Shares of European oil and gas companies fell last November when the fund's manager, the Norwegian central bank, announced its proposal to cut the exposure of the fund - and thus the Norwegian government - to oil price fluctuations.

"Divestments of the energy stocks in the (fund) is not an effective insurance against a permanent decline in oil prices. The energy stocks only contribute marginally to Norway's oil price risk," commission chair Oeystein Thoegersen said in a statement.

The fund, the world's largest sovereign wealth fund, invests Norway's revenues from oil and gas production for future generations in stocks, bonds and real estate abroad.

Energy stocks amounted to about 4 percent of the total value of the fund, or about 315 billion Norwegian crowns ($37 billion), at end-2017, said the commission.

($1 = 8.4525 Norwegian crowns)

(Reporting by Gwladys Fouche; Editing by Terje Solsvik and Edmund Blair)