Europe: recession over, crisis goes on

The eurozone may have emerged from months of economic contraction, but its stocks remain vulnerable.

"The eurozone is doing surprisingly well," says Richard Barley in The Wall Street Journal. The second quarter's GDP growth figure of 0.3%-1.1% annualised beat expectations and ended 18 months of recession. Recent business surveys suggest the positive momentum will continue.

Solid economic data and falling bond yields (in other words, falling borrowing costs) in the debt-soaked peripheral' countries have boosted sentiment. The pan-European FTSE Eurofirst 300 stock index has jumped 10% since late June. Spanish and Italian stocks are up 15%. Europe has outperformed America too of late, as its equity markets are more cyclical "and more exposed to low-quality financials", says Robert Farago of Schroders.

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