Valuations look compelling amid doom and gloom

ON EUROPE

Threadneedle's William Davies says resilient Europe equities have been encouraging.

We have been encouraged by the resilience of European equities year to date, particularly given persistent headwinds from the sovereign debt crisis in the eurozone periphery. While economic activity in the periphery remains anaemic, the recent strength of data for Germany and France has led us to upgrade our 2011 GDP forecast for the eurozone from 1.5% to 1.9%. The situation in the periphery remains dire. Greek credit spreads have continued to widen as the government has proposed a highly optimistic budget deficit target of 1% in 2015. This compares with a projected deficit of 6.4% in...