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STOCKS NEWS EUROPE-Dip in inflows 'temporary' -BNP strategists

The recent geopolitical tensions that have recently slowed the strong momentum in investment in-flows going into European stocks is a temporary setback and the fundamentals are still intact for further brisk in-flows for the region, BNP (Paris: FR0000131104 - news) Paribas strategists write in a research note.

"...We believe investors are gradually re-allocating risk from core (DAX) to the periphery and from cyclicals to financials but also moving from a 'hunt for yield' mind-set to 'hunting for return'," the strategists write.

"European equities and the Italian ones in particular have been underweighted in global equity portfolios. Significant flows into European equities are needed for this underweight positioning gap to correct and normalize back to historical average...This migration could become a major theme in Europe for 2014."

European equities - which were dumped by global investors during the euro zone debt crisis - have been attracting inflows at the fastest pace ever in the past few months, according to EPFR Global data.

Reuters Messaging: blaise.robinson.thomsonreuters.com@reuters.net