OSLO, March 7 (Reuters) - Norway's domestic state pension fund Folketrygdfondet said its 2016 return increased to 7.1 percent from 7.0 percent in 2015, increasing the market value to 212.3 billion Norwegian crowns ($25.12 billion).
* "Improved outlook for the global economy, rise in oil prices and record high salmon prices ensured solid results for the year," Folketrygdfondet's Chief Executive Olaug Svarva said on Tuesday.
* The fund says the return beat the market by 1.2 percent.
* Says there are significant challenges in the salmon industry, problem with salmon lice is the main risk in its investments in salmon farming companies. ($1 = 8.4503 Norwegian crowns) (Reporting by Camilla Knudsen, editing by Ole Petter Skonnord)