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STOCKS NEWS EUROPE-Don't buy yet, says Natixis
June 5, 2012 / 8:21 AM / 5 years ago

STOCKS NEWS EUROPE-Don't buy yet, says Natixis

European equities may look attractively valued, but it is too soon to start buying given all the risks, not least from Greece, Natixis equity strategists say.

Euro zone stocks - which have slumped around 20 percent since mid-March - offer lower price/earnings ratios and higher net yields than U.S. or Japanese equities.

“Even factoring in a contraction in profits of 2-3 percent in 2012, based on the historical sensitivity of European companies to macro growth, the valuation of the market is significantly lower than its long-term average,” the Natixis strategists say.

“When to take advantage of this attractive valuation to play a European integration rally? Not before the completion of the political risk phase, i.e. after the formation of a pro-Euro government in Greece and the first tangible signs of Franco-German convergence on federalism and growth.”

Reuters messaging rm://antonina.vorobyova.thomsonreuters.com@reuters.net

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