(Reuters) - U.S. funds increased recommended equity allocations in August to their highest since the start of the year as managers went in search of better returns even with stock indices trading near record highs, a Reuters poll showed on Wednesday.

After keeping allocations in their model portfolio steady for most months this year, yield-hunting U.S. fund managers increased their recommendations for equities.

The survey of 13 fund managers conducted between Aug. 15 and 30 showed them increasing equity allocations in the model global portfolio to 52.4 percent, the highest since January.

Fund managers cut allocations to alternative investments to 5.7 percent from 6.9 percent the previous month. But recommended allocations to bonds and property remained steady from the previous month and at relatively high levels.

Within equities, a regional breakdown showed an increase in allocations to North American stocks in August to 64.4 percent from 64.1 percent in the previous month.

"We retain a bias toward domestic equities ... due to the relatively stronger economic momentum and signs that future earnings growth will be positive," said Alan Gayle, director of asset allocation and senior investment strategist at RidgeWorth Investments.

U.S. consumer confidence rose to an 11-month high in August, with households more upbeat about the labor market. Further signs that the economy is regaining steam have brought back market bets for interest rate hikes this year.

Federal Reserve Chair Janet Yellen and Vice Chair Stanley Fischer kept open the possibility of a 2016 rate hike, perhaps as soon as September, at a meeting of central bankers last week in Jackson Hole, Wyoming.

(Reporting by Shrutee Sarkar; Polling by Kailash Bathija and Vartika Sahu; Editing by Catherine Evans)