Nearly half of Europe's biggest stocks are in bear market

By Ritvik Carvalho and Julien Ponthus

LONDON (Reuters) - Nearly half of Europe's largest stocks are now in what analysts call a bear market or downturn, data analysed by Reuters showed on Monday, as fears mount that the post-financial crisis rally might be on its last legs outside the United States.

The pan-European STOXX 600, currently at a 22-month low, is itself down almost 12 percent since its January peak, and 290 of its 600 components have lost at least 20 percent in value from their highest levels in the last 52 weeks.

Two sectors stand out particularly in the retreat: the automotive industry and banks, which have lost roughly 28 percent and 25 percent respectively.

While Wall Street's buoyant indexes managed to bounce back last Friday after the biggest scare since a market correction in February, shares in Asia and in Europe are currently failing to recover.

The divergence between bullish U.S. stock markets and the rest of global stock markets has been a red flag for investors since the beginning of the year.

(STOXX600: ttps://tmsnrt.rs/2OnUauq)

European equities have struggled as political turmoil and the region's vulnerability to trade risks starkly contrasted with the allure of tax cuts, stock buybacks and a booming economy in the United States.

A poll of about 30 brokers, fund managers and analysts at the end of August showed that the STOXX 600 index was expected to rise by only 2.8 percent to 400 points by year-end, but this forecast looks increasingly optimistic.

"I was one of the most pessimistic but I think I was right," said Stephane Barbier de la Serre, a strategist at Makor Capital Markets who participated in the poll and expects the index to end the year at 350 points.

Hit by a toxic mix of rising U.S. Treasury yields, a strong dollar, slowing domestic growth, an escalating Sino-U.S. trade war and rising oil prices, equities from emerging markets are already deep into bear market territory, down more than 25 percent, and have lost more than $1.1 trillion in value.

Analysts from Bank of America Merrill Lynch said on Friday that 1,557 global stocks out of 2,767 - or 56 percent of the MSCI ACWI - are in a bear market.

(Additional reporting by Helen Reid)