Strategists still bullish about European stocks despite recent rout

London

INVESTORS may be yanking out money from European stocks at the fastest pace in months, but strategists are standing by their optimistic calls.

After a rout spanning all assets that dragged global equities into a bear market last week, the average forecast now sees the European benchmark closing the year with a 23 per cent rally from Friday's close. Take one of the biggest bulls on the region, UBS Group AG - which even after cutting its year-end target projects a 28 per cent rally.

"Our target was starting to be a bit nuts," said Karen Olney, UBS's head of thematic equity strategy, who was behind the bank's decision to cut its estimate to 400 this month from 435. "You're now in a position where the downside is much less worrying than the risk of upside. Investors may be feeling physically ill about the markets, but that never goes on…