Tide turns for Europe with 66% expecting economic expansion

There is little doubt the tide is turning for one of the most unloved regions. Investor sentiment towards Europe in July, as measured by the Bank of America Merrill Lynch fund manager survey, was at its lowest level since 2003.

Just 34% of respondents expected growth in the European economy in the coming year. In the space of a month, the pendulum has swung, with 66% of respondents now anticipating economic expansion. Economic data has confirmed France and Germany as the first of the G7 nations to emerge from recession while leading indicators suggest most of the region’s major economies will return to growth in the second half of this year. The pace of earnings downgrades has slowed markedly while upgrades are expected to increase in the coming months as economies continue on the path to recovery. Recent repay...