European stocks, laggards in last year’s global market rally, are turning out to be less vulnerable than peers in the current rout.

While key U.S. benchmarks entered a correction, and emerging markets tumbled anew in response, the Stoxx Europe 600 Index had smaller losses, taking its decline since a Jan. 23 high to a little over 7 percent. That’s a departure for the region’s equities, which have tumbled more than Wall Street peers in recent global selloffs, notably in mid-2015 and early 2016.

In pullbacks of 1.1 percent or more over the past three years, Europe has underperformed the U.S. 85 percent of the time.

The Stoxx 600 advanced 7.7 percent last year, less than half the gains in the S&P 500 and well below the MSCI Emerging Market Index’s 34 percent rally.

One point in Europe’s favor is cheaper valuations before the recent pullback, key U.S. gauges were trading at record levels, widening their gap with the Stoxx 600. While the declines have narrowed the spread, members in the regional benchmark remain cheaper than American peers.

Barclays Plc, Credit Suisse Group AG and Allianz Global Investors have been among investors seeking buying opportunities in cheaper stocks underpinned by a rebound in global growth. Money manager Pictet finds European equities more appealing than the U.S., while strategists at JPMorgan Chase & Co. say euro-area equities are among those offering the best risk reward because of more attractive valuations and positive operating leverage.

Source: Bloomberg

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