* Gains of around 5-6 pct seen for European indexes
* France, German elections seen as major risks
* CAC and DAX seen up between 6-7 pct
By Alistair Smout
LONDON, Dec 7 European shares are expected to
rise steadily in 2017, but analysts are cautious over possible
shocks after a series of unexpected political upsets raised
volatility this year.
A Reuters poll of strategists, brokers and analysts taken
over the past week predicts a rise of around 5-6 percent for the
STOXX 600 and Euro STOXX 50 in 2017.
However, after a tumultuous year featuring shock results in
both Britain's referendum on European Union membership and the
U.S. presidential election, neither index is expected to fulfil
earlier predictions for gains in 2016, nor are they seen
regaining 2015's all-time highs next year.
Political uncertainty remains a key worry, with elections
due in France and Germany and concerns over leadership in Italy
after Prime Minister Matteo Renzi lost a referendum on Sunday on
constitutional reform, as well as how Britain will proceed with
leaving the European Union.
Italian banking stocks have been particularly volatile as
the government seeks ways to prop up its ailing lenders.
Yet for all that, the polls reflected a broadly unchanged
set of expectations from October's poll.
While many had predicted the surprise election of political
novice Donald Trump as president would hinder markets, it has
actually boosted growth and inflation expectations, helping
"For the moment, the reflation narrative seems strong and
any evidence that the Trump plan is not working may not be
available until 2019," said Russ Mould, Investment Director at
AJ Bell, who said it was unwise to bet against the momentum of
the market in 2017.
"(However), the downside risks have grown and the upside
The STOXX 600 is expected to hit 350 by mid-2017 and to be
at 366 by the end of the year, slightly higher than predicted in
the last poll in October.
For the Euro STOXX 50, the index is expected to
reach 3,255 by the end of 2017, again similar to predictions
made last quarter.
Both indexes are down over 5 percent this year, confounding
predictions for double digit percentage point rises, as both
have struggled to recover to pre-Brexit referendum levels.
Italy's FTSE MIB was expected to drop to 17,155, a
3 percent fall from current levels, by the middle of 2017.
Italian stocks are set to suffer from political uncertainty
after Renzi said he would resign following his referendum
While it has rallied off post-referendum lows, the FTSE MIB
remains down around 17 percent this year. The index was expected
to recover to 18,000 by the end of 2017, up just 1 percent from
Tuesday's 17,757.80 close.
Germany's DAX and France's CAC are seen
rising 6 percent and 7 percent respectively by end-2017, with
elections seen as possible causes of volatility.
"The wave of anti-establishment voting poses a big threat to
Europe in 2017 given the elections that will take place in
Germany, France and the Netherlands, and now more than likely
Italy as well," said Craig Erlam, market analyst at OANDA.
"Further disintegration in Europe could spell the beginning
of the end for the euro zone project and leaders will have to
work hard to ensure the year passes without any further
(Poll data: )
(Other stories from the Reuters global stock markets poll:
(Editing by Ross Finley and Alexandra Hudson)