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11/13/06

IHT: Europe: Optimism blossoms as interest rates rise - by Adria Cimino

For the complete report in the International Herald Tribune click on this link

Optimism blossoms as interest rates rise - by Adria Cimino

PARIS: Investors in European stocks are returning to raw material producers, industrial companies and automakers in a show of confidence that economies will expand even as interest rates rise.

Growing optimism among German and French executives and falling unemployment in the United States helped revive demand for so-called cyclical stocks, or shares of companies that are the most dependent on economic growth. Those stocks trailed the Dow Jones Stoxx 600 index last quarter because of concern that higher rates could trigger a slump.

"The outlook for the economy is relatively good, and the price of cyclicals remains reasonable," Jean-Luc Enguehard, chief executive officer of La Banque Postale Asset Management in Paris, said.

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