Enjoy Europe cheer while it lasts, October looms

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European markets have enjoyed an uptick in economic momentum over the past few months, leading many to believe the region may finally be getting back on its feet after sovereign debt troubles weighed on confidence over the past four years.

Yet, two risk events could change all of that in October, according to Nomura.

The upcoming Troika review of Greece's reform process and an Italian senate vote could derail recent optimism and bring about a "European structural backsliding," analysts at Nomura Equity Research said in a report.

(Read more: Why the next 'great rotation' could be from US to European stocks)

The European Central Bank, International Monetary Fund and European Union - dubbed the Troika - are due to arrive in Athens sometime next month to assess the pace of reforms.

If they are dissatisfied with Prime Minister Samaras' progress, "it could bring the question of a further debt restructuring back to the fore, and raise concerns over similar steps proving necessary for Cyprus and Portugal," the report said.

Athens already received a debt write-down of over 100 billion euros in 2012, the largest ever sovereign-debt haircut. If a second attempt is made, fears of a spillover effect could lead to a spike in peripheral bond-yields, which have fallen recently due to positive growth data.

(Read more: Greece should have never been allowed to join euro: Merkel)

Last month, German finance minister Wolfgang Schaeuble warned of the possibility of a third bailout package for the Mediterranean nation.

October will also see a vote in Italy's senate on the possible ban of former Prime Minister Silvio Berlusconi from public office, which Nomura argues could pose a threat to the stability of the ruling coalition and revive national political turbulence following the formation of a new government in April.

"The biggest immediate threat to the coalition is, we believe, consideration in the senate over whether Mr Berlusconi should be expelled from the seat he won there in the February 2013 general election under the terms of a 2012 anti-corruption law," wrote Alastair Newton, Nomura's senior political analyst.

"Some of Mr Berlusconi's supporters are arguing that the 2012 law should not be applied retrospectively," which threatens to bring down the government if it is, he added.

(Read more: Italy's crucial tax deal will come at a cost)

These risks could see investor confidence in the euro zone retreat despite the recent spate of upbeat economic reports, including factory activity and second-quarter GDP, which helped both the FTSEurofirst 300 and MSCI Europe indices squeeze out 1 percent gains since the beginning of May.

"The outlook for European equity market performance unambiguously remains closely tied to developments in the continent's large, stressed sovereigns. With this in mind, the European equity markets are likely to trade in line with the market's perception of political risk," the report stated.

(Read more: Should you dive into European markets?)

Despite these risks, Nomura maintains its overweight rating on European equities and expects them to outperform their U.S. counterparts in the months ahead.

— By CNBC.com's Nyshka Chandran. Follow her on Twitter @NyshkaCNBC