By Yali N’Diaye

WASHINGTON (MNI) – Fund flow data for the fourth quarter show
investors are “losing patience with the Eurozone’s inability to contain
its long running crisis,” EPFR Global said Thursday.

The fund flow data provider added that while European leaders have
been trying to find a solution to end the debt crisis for the whole
area, “equity investors and fund managers see a different future for
Germany, France and the Netherlands than they do for Italy, Spain,
Portugal, Greece and Ireland — a future that may involve the
dissolution or radical restructuring of the Eurozone.”

“On the fixed-income side, investors continue to avoid direct
exposure to Developed European debt with EPFR Global-tracked Europe Bond
Funds posting outflows 40 of the 46 weeks year-to-date,” EPFR added.

Still, Barclays Capital wrote in its Global Outlook Thursday that
“it is time for investors to dip their toes in the water and begin to
re-engage in measured and careful risk-taking.”

“Prospects for avoiding either a double-dip recession or a
catastrophe surrounding the euro area debt crisis have improved somewhat
over the past couple of months,” Barclays Capital argued, expecting
Europe to eventually establish a “sustainable framework.”

Overall, they do expect sovereign risks to “abate somewhat.”

It will take effort to convince investors, however.

Fitch reported Thursday that it expects investors appetite for risk
— in the form of high yield — to be “cautious” in Europe.

“Despite low default rates and a return of retail investor flows
into high-yield funds in recent months, high-yield investment managers
will continue their selective approach to channeling funds towards
credits in Europe’s less volatile sectors and more stable operating
environments,” said Matthias Volkmer, Director in Fitch’s European
Leveraged Finance team.

“While Fitch does not discount that conditions in lending markets
may improve with more convincing eurozone crisis solutions, companies
choosing to delay accessing the public capital markets will only
increase the pipeline into 2012 and beyond, and may compromise their
access and pricing power if capital market and economic conditions do
not improve,” added Edward Eyerman, Fitch’s Head of European Leveraged
Finance.

And Thursday’s data from the Investment Company Institute show that
total money market mutual fund assets increased by $25.26 billion to
$2.678 trillion for the week ended Wednesday, December 7, with increases
both on the institutional and the retail sides.

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: MNUEQ$,M$U$$$,M$$FI$,MAUDS$]