Shares have retreated from record highs reached in April, pulled down partly by concerns about a slowdown in China, the world's second-biggest economy and a major consumer of commodities such as metals and oil. But economic stimulus measures from the European Central Bank have prevented markets from losing too much ground, with the main German and French markets both up some 10 percent overall in 2015.
However, the FTSE has underperformed its European rivals and is down around 5 percent for the year, partly because commodity-related stocks account for a bigger part of the market in Britain than in France and Germany. The FTSE, DAX and CAC ended the year down 12 percent, 13 percent and more than 11 percent, respectively, from their April peaks. A Reuters poll earlier this month forecast that while European stocks would rise in 2016, they would not get back to the highs of 2015.
Admiral Markets' Darren Sinden said that despite some lingering concerns about debt-ridden European economies such as Greece, European stocks still promised better returns for investors than the low yields on offer in bond markets. "European stocks are still probably the best choice in a limited range of options," said Sinden. "There's not much incentive to hold bonds, and the US is at the tail-end of a bull run, so it's hard to justify putting your money there. Nevertheless, in Europe, I still have some concerns about the domestic European economic recovery," he added.