EUROPE - European investors have a "love affair with finance stocks" says Merrill Lynch Investment Manager's David Bowers, following the firm's September fund manager survey.

Due to the US Federal Reserve's decision last month to hold interest rates steady, global investor optimism was reviving according to MLIM's global fund manager survey for the first week of September.

Still, the survey, in which a total of 222 fund managers participated, also showed that investors have responded less robustly than might be expected, but they are investing their cash again.  This is "moving broadly into equities without any significant sector or country rotation", with the Euro-zone equities favoured over the US.

Nonetheless, what optimism there is seems to have rubbed off more on European investors according to the survey. However, David Bowers, former strategist for MLIM and who currently acts as a consultant to the survey, spoke about European investors "being in love with finance", with strong interest from European investors in European finance stocks.

"Contrarian investors prefer investing in banks and the insurance sector. Also there is a strong preference for healthcare and pharma, but they don't like utilities, travel and leisure and the auto sector."

Bowers suggested: "The brave contrarian investor should now perhaps look towards, for instance, the auto sector."