Goldman bets on European stocks, steers clear of U.S.

The investment bank upgraded its short-term view on European equities to "overweight" from "neutral" in a note dated July 20, which cited the recent deal to start negotiating a new Greece debt package as one of the reasons for a more positive view, and downgraded U.S. equities to "underweight" from "neutral".

The euro's weakness against the dollar, the European Central Bank's quantitative-easing program and accelerating economic growth should fuel European stocks' outperformance versus U.S. stocks, the note said.

The STOXX Europe 600 has rallied nearly nine percent in the last two weeks, as an impasse between Greece and its creditors was broken and they agreed a cash-for-reform deal.

"European equities have been one of the key asset classes to benefit from a fading of Greek risks," Goldman Sachs strategists said.

"While performance potential might be limited in the near-term after the strong rebound, several supportive fundamental factors should help outperformance of European vs. U.S. equities until year-end."

(Reporting by Alistair Smout and Alasdair Pal; Editing by Lionel Laurent and Mark Potter)

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