Financial advisors have become less bullish on their outlook for Canadian markets and outright bearish on financials and U.S. equities in recent weeks, according to BetaPro Management Inc.’s Q3 2009 Advisor Sentiment Survey.

The survey of more than 300 advisors, conducted between June 18 and June 30, shows that advisors have become more cautious following the strong run-up in equities over the second quarter. It measures advisors’ quarterly outlook on 15 key benchmarks covering equities, bonds, currency and commodities.

The percentage of advisors bullish on the performance of the S&P/TSX 60 index dropped to 40% from 55% in the second quarter, while bears in this category almost doubled to 41% from 21%.

An even greater amount of confidence was lost in Canadian financial stocks, with the percentage of advisors bullish on the S&P/TSX financials index falling to 22% from 46% in Q2.

Meanwhile, advisors also became significantly less positive on U.S. equities. Advisors bearish on the S&P 500 index surged to 48% from 28% last quarter. Those bearish on the Nasdaq 100 index jumped to 38% from 23%.

In terms of commodities, advisors remain cautiously optimistic on gold and silver, but the survey showed that the percentage of crude oil bulls dropped sharply to 45% from 69% the previous quarter.

The number of bears on the U.S. 30-year bond edged up to 55% from 52% on the expectation that long-term interest rates will continue to rise. The consensus is still bullish on the loonie gaining ground against the U.S. greenback over the third quarter, with 62% of advisors holding this view.

“The third quarter survey results suggest that advisors are moderately bullish on Canada and bearish on U.S. investments,” said Howard Atkinson, president of BetaPro. “Not surprisingly, their strongest opinions favour the Canadian dollar over the U.S. dollar, and being short longer-dated U.S. bonds.”

Added Atkinson: “The possibility that equities may take a breather over the quarter makes sense after such a strong showing in the second quarter and this is reflected in the survey results.”