European shares to end 2018 just above January peak: Report

Europeanshareswillend2018justahead of theirJanuarypeak, recovering from current levels as a resilient economy gradually overcomes a temporary slowdown and corporate earnings continue to rise, aReuterspollshowed.

Thepollwas taken May 15-30, largely before a mounting political crisis in Italy sparked worries over a possible breakup of the euro zone, triggering a heavy sell-off in Italian assets.

The pan-EuropeanSTOXX 600 benchmark index is expected to reach 406 points by year-end, according to thepollof 29 brokers, fund managers and analysts, up 5.6 percent from Tuesday's close and 4.3 percent on the year.

That will be enough for the index to surpass a 29-month high of 403.7 points it reached in January.

Eurozone blue-chips are expected to rise a bit further, up 7.9 percent from Tuesday's close to 3,700 points, according to the median of 37 responses.

Prospects forEuropeansharesfaded at the beginning of the year as economic growth slowed more than expected, raising concerns there will be no return to boom.

But analysts were optimistic economic activity should be robust enough to modestly prop up sharesand company earnings.

"For now, synchronized economic expansion, solid earnings growth and still relatively low volatility levels look supportive for global equity markets", Deutsche Asset Management analysts said.

According to ThomsonReutersIBES estimates, earnings for STOXX 600 companies are expected to grow 8.7 percent in2018on revenues up 5.1 percent.

A majority of investors in Europe answered "yes" when asked if they thought global stocks would continue to rise in2018.

Among the risks identified by investors are Italy, Brexit talks, a US-China trade war, oil prices surgingabove100 dollars a barrel or international tensions involving Iran or North Korea.

"The economic picture stays positive but political risks are the top concern," said Tomas Hildebrandt, senior portfolio manager at Evli Bank in Helsinki.

A faster-than-expected acceleration in USinflation and interest rates is also seen as a threat after a rise in American wages took the market by surprise in February.

With the current rise in the dollar, investors said they believed the biggest risk of a sell-off was in emerging markets, where returns looked less attractive given rising USgovernment bond yields.