The equities analysts at Swiss-based UBS are taking an increasingly dim view of the U.S. and global economies and are suggesting that investors should be reducing their equity exposure from “overweight” to what they call a “neutral tactical stance” of stocks, bonds and cash.

Equity market strategists Stephen R. Friedman and Thomas Berner, in a new report, cite an extremely weak Philly Fed Index last week and yet another weak housing report as clear indicators that the U.S. economy is “on the brink of a recession” even as other data still point to “very slow but positive growth.”

The two strategists expressed additional concern about the “stability in the Eurozone,” where European central banks in countries like France and Germany appear reluctant to wholeheartedly support Eurozone countries that are facing debt problems.

Friedman told On Wall Street, “Even though the market has corrected quite significantly and appears cheap, it could still go down.  We see very weak growth for the rest of the year, but at the same time we’re just one more shock away from a recession. The U.S. economy has recorded several body blows.” 

They’re not alone in those concerns.

Earlier Monday, PIMCO Managing Director and Co-Chief Investment Officer William Gross said on CNN that he felt a new U.S. recession was unavoidable because the Fed cannot lower interest rates further and because Congress is taking money out of the economy instead of trying to stimulate it with federal spending.

Gross also said that in Europe, the central banks “need willingness to actually write checks,” yet instead political leaders in the two largest economies, France and Germany, are talking about cutting budgets.

 The UBS strategists say they expect the debt situation in Europe to “remain a source of market turmoil” for at least the next few months. They call the policy response of European bankers and policymakers “ineffectual” and say they have so far remained “behind the curve” in confronting the Eurozone’s crisis.

The UBS analysts said, barring another shock, they expect U.S. equities overall to show “modest gains” over this year and 2012, with price-to-earnings multiples of forward earnings rising to 12X by the end of this year and 13X in 2012, with the S&P 500 Index possibly reaching 1,250 by year’s end this year, and 1,400 in 2012.

They note that the debt issue in the U.S. remains unresolved and add that with consumer sentiment low and falling, and economic growth stalling, near-term corporate capital deployment is “likely to remain conservative.”

Predicting GDP growth in 2012 to be an anemic 2.3%, the strategists warn that they don’t expect corporate earnings, which so far have been significantly outpacing U.S. GDP, to be able to maintain that “disconnect” for much longer.

All that said, they argue that equities “remain an attractive asset class,” particularly with bond yields now at a historic low and they conclude that “should the market decline further, a substantial pocket of value would emerge.”

Their advice to investors?

 “We’re not telling people to dump stocks, but it’s certainly not a buying opportunity yet either," Freedman said.