Quilter

After several volatile months, risk assets rallied strongly in late October on the expectation the latest moves by European policymakers would produce the long-awaited ‘comprehensive solution' and stabilise the debt crisis.

The lack of effective political leadership, combined with renewed fears about global growth, resulted in the retreat to perceived ‘safe havens' gathering pace in August.

Economic growth forecasts of 3.4% for 2011 remain around the long-term average.

The outlook for global growth remains robust thanks to one of the biggest investment spending cycles for several decades.

Markets are starting to question whether the prospect of robust - albeit unevenly distributed - growth will be disrupted by rising inflation and increasing geo-political risk.