According to a survey by Bank of America (BofA) Merrill Lynch, five per cent of fund managers questioned during August expected the economy to pick up compared with 12 per cent who thought it would decline when quizzed the previous month.
Over three-quarters said that they now think the chances of a double-dip recession are unlikely, the report showed.
Gary Baker, head of European Equities strategy at BofA Merrill Lynch Global Research, said: âInvestor sentiment on Europe has staged a remarkable recovery in the past few months, underpinned by greater optimism about Europe's banks. Economic data now has to continue to support this shift.â
A tracker of investor risk and liquidity moved to nearly neutral in August, which the financial institution's report said was an indicator of an improvement to investor outlook, the latest monthly report showed.
Further findings revealed that investors have opted for more European equities during the last month than those from Japan or the US.
By Jim Ottewill