Tuesday, January 4, 2011

GLOBAL MARKETS: European Stocks Rise; Bullish Tone Exists


European stock markets push top Tuesday, with shares in London leading the way, as market participants are seemingly hopeful about the global economic outlook in the year ahead.

Equity markets are expected to trade powerfully through 2011 on a combination of multiple expansion and earnings growth, told Royal Bank of Scotland. It added that increasing optimism around the U.S. economy may contribute to pro-equity asset allocation flows, while in Europe, earnings-per-share growth could be just over 20%, as the global economy helps the top line, while domestic labor market slack ensures favorable unit labor cost trends persist.

"Our Stoxx Europe 600 year-end target of 320 implies circa 15% upside from present levels, and would see the market multiple rise to 12x 2011 earnings [currently around 11x]," added RBS.

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