Stock investors scout out Europe's rate-cut winners

MILAN/LONDON - Investors in European equities are stepping up their search for stocks that are likely to benefit from lower borrowing costs, after the European Central Bank's first interest-rate cut in almost five years.

But now Amundi, Europe's biggest money manager, and other investors see scope for a rebalancing in their favour. Real estate, which tends to outperform in bond bull markets, might be in for a breather from selling, as the factors that threw some property markets into a deep crisis start to abate. Lower rates might help kick-start new projects, increase asset value and lower the cost of debt.

Another top short, BT, rose 17% on earnings day May 16, scoring its biggest surge since going public in 1984. "I always love to squeeze the shorts and prove them wrong ," its CEO Allison Kirkby said. Barclays sees profit-taking in banks around ECB and Bank of England rate cuts in the shorter term, but cheap valuations and buybacks means it is positive on this sector in the longer term.

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