Investors get closer to consumer, but wary of surprises

By Sitaraman Shankar and Blaise Robinson - Analysis

LONDON/PARIS (Reuters) - As commodity prices fall and inflation expectations cool, brave equities investors are dipping their toes into sectors that are closer to the consumer, wary that a similar bounce in financials fizzled out.

Travel .SXTP, technology .SX8P, retail .SXRP and auto .SXAP stocks have been the top gainers in the past month since oil came sharply off a peak of above $147 a barrel. The gains are in sharp contrast to their showing over the past year when oil climbed incessantly.

"This could be the start of the recovery in the market and it will be these groups that lead the way in that case, but we still need to see confirmation of the trend," said Philippe Gijsels, a strategist at Fortis in Brussels.

"There would be an upside of 30 percent from these levels if you believe in a real rebound, but you don't need to buy the first 5 percent --- you can afford to wait for confirmation and still have ample opportunity to make money," Gijsels said.

A Merrill Lynch fund manager survey earlier this month showed that funds ploughed back into these sectors, with a net 2 percent of respondents saying they were overweight in tech stocks in August compared with a net 28 percent saying they were underweight the previous month.

Tech, travel and leisure, personal and household goods, banks, media and retail recorded the biggest month-on-month changes in favour of net overweights, and oil was the biggest loser, with the net percentage of portfolio managers saying they were overweight slumping to 11 from 52.

Analysts warn that plunging into consumer-related stocks amounts to calling the bottom of the market, and few are ready to do that.

European stocks, measured by the broad STOXX 600 benchmark .STOXX have fallen 24 percent this year, taken down by a credit crisis that forced banks to make large asset writedowns and slowed the economy.