Top European stocks will rise from current levels by the end of 2015 but fail to hit fresh highs for the year, a Reuters poll forecast last Monday. The poll was conducted last week, during which Greece and its international creditors failed to secure a last-ditch cash-for-reforms deal, setting up a technical default on Tuesday to be followed by a Greek referendum on Sunday.
The results suggest European stock markets will avoid a Greece-related meltdown but not find again the investor enthusiasm that followed the European Central Bank's launch of a bond-buying scheme to spur economic growth at the start of 2015.
European equities are currently trading at around seven-year highs, even after recent choppy trading driven by Greek jitters and a spillover of volatility from fixed-income markets.
Investors say the next leg-up will depend on companies' ability to deliver earnings growth as the economic backdrop improves. The Reuters poll of over 40 traders, fund managers and strategists gave a median forecast for the pan-European STOXX 600 Europe index to end 2015 at 415 points. That would represent gains of around 5 percent from Friday's 396.85 close and almost match an all-time high of 415.18 hit in April.
The euro zone EuroStoxx 50 index is expected to end the year at 3,794 points, up 5 percent from Friday's close of 3,621.37 but short of 2015 highs.
The picture is broadly similar for key benchmarks in Frankfurt, Paris and London. The DAX is seen ending 2015 at 12,000 points, short of its record 12,390.75 hit in April; the CAC 40 is seen rising to 5,270 points, just shy of its 2015 high of 5,283.71; and the UK FTSE 100 is seen at 7,100 points, again below a record set in April.
There were some bullish readings from global banks HSBC and Barclays, which expected top euro zone stocks to set new records for 2015, while Goldman Sachs was less optimistic with below-median predictions.
"We expect euro zone earnings to surprise significantly to the upside this year, helped by an improving business cycle and the strongest currency tailwind since the inception of the euro," said Robert Parkes, a strategist at HSBC.
"Ultra-loose monetary policy adds further support and we do not see the valuation of the market as being a problem."
The STOXX Europe 600 trades at a price-to-earnings ratio of around 17.84, according to Reuters data, effectively cheaper than 19.68 for the US S&P 500 and 21.18 for the Japan's Nikkei 225.
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