European markets look set for continued growth in 2007

European markets reached five-year highs towards the end of 2006, buoyed by a round of merger and acquisition activity and healthy earnings - a trend that is set to continue in the next 12 months, according to Richard Pease, manager of the New Star European Growth fund. He says: "Takeover activity was particularly strong in Continental Europe in 2006. But, even with rising interest rates within the eurozone, credit is still relatively cheap and corporate activity is likely to remain a defining feature of the European equity markets in 2007." He points out that the eurozone economy outpa...