PARIS: European stocks are expected to climb before year-end, rebounding from a dismal second quarter, with analysts betting that euro zone leaders will take bold decisions to tackle the bloc�s debt crisis and central banks will flood markets with more liquidity.
The latest quarterly survey of around 50 fund managers and analysts conducted over the past week shows the eurozone�s blue chip Euro STOXX 50 index at 2,370 points by the end of December.
The poll also showed the broader Euro STOXX 600 ending 2012 at 260 points, a rise of about 6 percent.
On the longer term, the Euro STOXX 50 is seen at 2,500 points in mid-2013, up 15 percent and the STOXX 600 up 14 percent at 280 points.
The two indexes are respectively down 18 percent and 11 percent since mid-March, as fears that debt-crippled Greece will have to leave the euro zone and mounting doubts over the ability of Spain and Italy to manage their debts have spooked investors.
Earlier in June, the yield on Spain�s 10-year bonds hit a record high above 7 percent, levels that have previously led to government bailouts in Greece, Ireland and Portugal. Spain has already had to seek help for its banks, lumbered with bad debts from a property crash.
EU leaders arrived for a Brussels summit on Thursday more openly divided than at any time since the euro crisis began, with Germany�s Angela Merkel showing no sign of relenting in her refusal to back other countries� debts.
But despite all the jitters, most equities analysts and fund managers polled expect fresh measures from European leaders, that will at least gain time in the fight against the debt crisis and give the most indebted euro zone countries some breathing space.
�The market is expecting coordinated decisions from European leaders to fight the debt crisis,� said Gregorio de Felice, chief economist at Intesa Sanpaolo, who sees the Euro STOXX 50 at 2,370 points by year-end.
�At the same time, current stock valuation levels are attractive, which is a positive factor for the market.�
The euro zone�s blue chip Euro STOXX 50 index currently trades at 8.5 times 12-month forward earnings, well below a 10-year average of 11.3.
Other valuation tools also show European stocks at historically cheap levels, with the average dividend yield on the Euro STOXX 50 hitting 4.3 percent while 10-year Bund yields fell to below 1.2 percent earlier this month - setting a record spread between the two yields.
�The bearish sentiment towards European equities and the attractive valuation levels are definitely supportive,� said Patrick Moonen, senior strategist at ING Investment Management, which has 322 billion euros ($401 billion) under management. �This may lead to a big bounce if and when policy kicks in.��Reuters
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The latest quarterly survey of around 50 fund managers and analysts conducted over the past week shows the eurozone�s blue chip Euro STOXX 50 index at 2,370 points by the end of December.
The poll also showed the broader Euro STOXX 600 ending 2012 at 260 points, a rise of about 6 percent.
On the longer term, the Euro STOXX 50 is seen at 2,500 points in mid-2013, up 15 percent and the STOXX 600 up 14 percent at 280 points.
The two indexes are respectively down 18 percent and 11 percent since mid-March, as fears that debt-crippled Greece will have to leave the euro zone and mounting doubts over the ability of Spain and Italy to manage their debts have spooked investors.
Earlier in June, the yield on Spain�s 10-year bonds hit a record high above 7 percent, levels that have previously led to government bailouts in Greece, Ireland and Portugal. Spain has already had to seek help for its banks, lumbered with bad debts from a property crash.
EU leaders arrived for a Brussels summit on Thursday more openly divided than at any time since the euro crisis began, with Germany�s Angela Merkel showing no sign of relenting in her refusal to back other countries� debts.
But despite all the jitters, most equities analysts and fund managers polled expect fresh measures from European leaders, that will at least gain time in the fight against the debt crisis and give the most indebted euro zone countries some breathing space.
�The market is expecting coordinated decisions from European leaders to fight the debt crisis,� said Gregorio de Felice, chief economist at Intesa Sanpaolo, who sees the Euro STOXX 50 at 2,370 points by year-end.
�At the same time, current stock valuation levels are attractive, which is a positive factor for the market.�
The euro zone�s blue chip Euro STOXX 50 index currently trades at 8.5 times 12-month forward earnings, well below a 10-year average of 11.3.
Other valuation tools also show European stocks at historically cheap levels, with the average dividend yield on the Euro STOXX 50 hitting 4.3 percent while 10-year Bund yields fell to below 1.2 percent earlier this month - setting a record spread between the two yields.
�The bearish sentiment towards European equities and the attractive valuation levels are definitely supportive,� said Patrick Moonen, senior strategist at ING Investment Management, which has 322 billion euros ($401 billion) under management. �This may lead to a big bounce if and when policy kicks in.��Reuters
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