Growth in Europe ‘may have peaked’

EUROPE’S economy has been surging ahead this year, but investors are increasingly cautious, fearing the growth spurt may have peaked and that asset values could take a tumble.

Optimism among fund managers has fallen back from recent highs in Bank of America Merrill Lynch’s monthly survey of the sector, indicating that investors believe the recent rallies may have run their course.

Sentiment remains positive – those who expect corporate earnings to rise over the next 12 months outweigh those who expect a fall by a margin of 54pc.

That is down from 64pc a month ago, however, as some investors have cut back their forecasts of profit growth. The proportion of very enthusiastic investors has also dived – in June a net 25pc anticipated doubledigit per cent growth in earnings. The number has fallen sharply to a net 11pc, “suggesting last month may have been the peak”, BAML said.

“To remain bullish about the eurozone, investors said they would need to see evidence of 10pc or more growth in earnings per share, and agreement on a structural reform agenda in major Eurozone countries,” the survey found.