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Barclays unit advises "stay the course" on equities

By Ryan Vlastelica<br />NEW YORK (Reuters) - Barclays Capital on Thursday urged investors to "stay the course" with risky assets, arguing that a recent decline in sentiment may be overdone.

23 June 2011 15:29 GMT

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The investment banking division of Barclays Plc , in its quarterly Global Outlook report, said that while equity upside would be limited by a lack of resolution of the Greece debt situation and monetary tightening, improved economic growth could represent a tactical buying opportunity into the summer.

"Risks around the fiscal issues in Europe and the United States will persist, but we expect the news over the next few months to take a turn for the better in several areas," wrote Larry Kantor, head of research for Barclays Capital in New York.

Concerns about the fiscal situation in Greece have contributed to recent losses in equities which have brought the S&P 500 <.SPX> down 7.1 percent since a high in late April.

Kantor said that at current levels, equity prices were "not stretched, and maybe a little undervalued," forecasting improved growth in the third quarter as the economic impact of Japan's March earthquake faded.

Wall St stocks tumbled more than 1 percent on Thursday following weak data on the labour market and a sharp decline in oil prices.

(Editing by Kenneth Barry)

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