Where are the most compelling valuations in Europe?

Many of the headwinds faced by Europe over the past year are now starting to fade, says Invesco Perpetual's Stephanie Butcher.

Despite moving away from the abyss of the sovereign debt crisis, European equity risk premiums remain elevated, and not too dissimilar from the levels experienced in 2012 when uncertainty around the fate of the euro was at its height. Although the market remains concerned by slow growth, deflationary risks and the lack of earnings growth in Europe, this does not warrant the similar levels of risk premiums. It is encouraging to see the European Central Bank's commitment to price stability in the euro area and its willingness to use all available means to achieve this mandate. A targ...