Will European stocks bounce back?

France’s CAC 40 share index has fallen 9% from a mid-May high, underperforming wider European markets. Despite talk of European stagnation, European equities have delivered almost as much as US ones in recent years, with lower valuations providing a firm floor for stocks in the case of bad news. Investors are optimistic about European stocks, especially as balance sheets of once weak banking stocks have been fixed and banks are paying handsome dividends, suggesting potential for outsized share price performance in the future.

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