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Light at End of Tunnel for European Stocks?

After months of uncertainty in European stock markets, investors could be starting to regain their battered confidence and contemplate spending hoarded cash, analysts said Friday.

A Mexican federal policeman shines his flash light on the ground of a sophisticated clandestine tunnel that passes under the US-Mexico border on Wednesday, January 25, 2006 in Tijuana, Mexico. The tunnel, which is 1155 meters long (3789.37 feet) and sits 27 meters (88.58 feet) underground, is accessed through a large concrete block shaft in a warehouse labout 175 meters (574.15 feet) south of the border wall. Police also found several hundred bundles of drugs (believed to be marijuana) ready to
David Maung
A Mexican federal policeman shines his flash light on the ground of a sophisticated clandestine tunnel that passes under the US-Mexico border on Wednesday, January 25, 2006 in Tijuana, Mexico. The tunnel, which is 1155 meters long (3789.37 feet) and sits 27 meters (88.58 feet) underground, is accessed through a large concrete block shaft in a warehouse labout 175 meters (574.15 feet) south of the border wall. Police also found several hundred bundles of drugs (believed to be marijuana) ready to

“The sentiment has changed and many underweight money mangers are starting to consider going back to neutral,” Alessandro Fugnoli, global strategist at Abax Bank, told CNBC.com.

The attitude shift could lead to a mild rally in European stocks and risky assets next week, according to Fugnoli, but it is unlikely to be the start of a bull market, he added.

A flurry of corporate earnings will give investors a clearer picture of the European business landscape, with first-quarter results from banks such as Deutsche Bank and Banco Santander Central Hispano being closely watched for fear of further subpime-related losses.

Deutsche Bank has so far avoided the worst of the subprime effect, but may report a loss for the first time Tuesday, according to analysts.

Oil giants Exxon Mobil, BP and Royal Dutch Shell will also be delivering numbers next week and are widely expected to benefit from the recent record-setting oil prices.

Other companies reporting earnings include electronics and semiconductor manufacturer ST Microelectronics, mining giant Antofagasta and worldwide courier service TNT.