OSLO, April 18 (Reuters) - Norway's $1.6 trillion wealth

fund, the world's largest, posted a record profit of 1.2

trillion crowns ($109 billion) on Thursday for the first quarter

of 2024, boosted by strong tech stocks and a continuing boom in

artificial intelligence.

It was the fund's highest quarterly return in absolute terms

since its creation in 1996 and compared with a profit of 893

billion crowns at the same time a year ago. The fund's relative

total return was 9.1% in the January-March period.

"It is a remarkably strong quarter," deputy CEO Trond Grande

told Reuters, adding that the return was driven by the world's

top tech companies, dubbed "the Magnificent Seven", in

particular NVIDIA ( NVDA ) and Microsoft ( MSFT ).

"For NVIDIA ( NVDA ), it is making the hardware for AI," he said.

"(And for) other companies that are far ahead in looking

at how they can apply this new technology, and of course

monetise it, like Microsoft ( MSFT ) in the enterprise space and Meta

Platforms ( META ) in the social media space."

The fund invests the proceeds of the Norwegian state's oil

and gas production into stocks, bonds, unlisted property and

renewable projects abroad.

Its size is equivalent to $283,000 for every Norwegian man,

woman and child.

'JITTERY'

Since the end of the first quarter, markets have been "a

little bit more jittery", Grande said, given delayed

expectations that the U.S. Federal Reserve and other central

banks would cut interest rates.

The fund expected inflation to remain "a little bit more

sticky than perhaps was anticipated".

"As long as you don't see the inflation moving closer to

the banks' targets, rates are going to stay where they are - the

short-term rates," Grande said.

Regarding the conflict between Iran and Israel, markets

have been "somewhat muted" in their reactions, he said, perhaps

as oil supply is now less reliant on Middle East resources given

the growth in oil production from U.S. shale over the past two

decades.

As of March 31, some 72.1% of the Norwegian wealth fund's

assets were held in stocks, while 26.0% was invested in fixed

income, 1.8% in unlisted real estate and 0.1% in unlisted

renewable energy infrastructure.

The fund's overall return on investment of 6.3% was 0.1

percentage point below its benchmark index, it said.

A unit of Norway's central bank manages the fund, which owns

1.5% of all globally listed shares and has stakes in about 8,900

companies.

Separately on Thursday, the fund said it would vote in

favour of a proposal letting NatWest ( NWG ) buy back more of

its stock from the British government, amid efforts to speed up

privatisation.

($1 = 10.9966 Norwegian crowns)