Italy

Guy Monson, CIO & managing partner at Sarasin & Partners, looks beyond the eurozone and identifies the other key themes that will affect investment decisions over the next six months.

Moody's has cut Italy's credit rating by two notches to Baa2 as the euro area's third biggest economy faces higher funding costs and contagion risk from Greece and Spain.

Spanish short-term borrowing costs have risen substantially in its latest debt auction, reflecting the country's struggle to service its debts at a sustainable level.

EUROZONE CRISIS

Aspirational consumers with an insatiable appetite for luxury Western brands are growing in numbers throughout emerging markets, where favourable demographics have created a generation of young workers with spending power.

Henderson Global Investors' bond fund manager John Pattullo said the current crisis in Spain will result in Spanish bank bondholders taking severe haircuts, after a similar scenario in Ireland last year.

Niall Gallagher, European equities manager at GAM, has found value in unloved peripheral European equities overlooked by risk-averse investors.

EUROZONE CRISIS

Spanish and Italian bond yields have continued to race ahead following the European Union's bailout of the troubled economy's banking system.

EURO 2012