Firms in the core of Europe offer up the greatest value

The sharp rally in European equity markets appears to have run ahead of the fragile economic recovery but there still seems to be scope for further setbacks.

The growing debt crisis among some ‘periphery’ eurozone economies is leading to the early withdrawal of expansionary fiscal policy. The single currency provides less flexibility as these countries attempt to cope with the slowdown. Periphery countries such as Portugal, Greece, Spain, Ireland and the Baltic States, which have enjoyed years of strong expansion driven by housing booms, higher wages and trade deficits, now face unsustainably high consumer and government debt. The most high-profile case, Greece, is rapidly losing the confidence of bond markets over concern it will be incapabl...