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[LONDON] Swiss bank UBS has cut its year-end target for a leading European equity index by eight per cent, mainly due to the prospect of slightly weaker economic growth and lower earnings growth.
UBS reduced its year-end target for the pan-European STOXX 600 index to 400 points from 435 points, although this would still represent an expectation of the STOXX 600 rising 21 per cent from now until the end of 2016.
UBS also cut its forecast for eurozone GDP (gross domestic product) to 1.6 per cent from 1.8 per cent for this year, and down to 1.7 per cent from 1.8 per cent for 2017, partly due to the impact of low oil prices and tighter credit market conditions.
"As a result of the GDP downgrade and the mark-to-market on the lower commodity prices, we reduce our 2016 EPS growth forecast from 13 per cent to 8 per cent - still above consensus of 4 per cent," UBS added in a note on Thursday.