History suggests that if this continues, it would probably be good for UK equities. Since the euro began in 1999 there's been a strong correlation (0.53) between annual growth in euro area industrial production and annual returns on the All-Share index, with one percentage point above-average growth associated, on average, with 1.6 percentage points above-average equity returns. One reason for this is that economic growth increases investors' appetite for risk, which raises share prices around the world.
But there are risks to this. Norman Villamin at Coutts warns that the impact of Europe's brighter economy might be offset by falls in global shares because of fears of an end to US quantitative easing, or about events in Syria. Others fear that the recovery could be weak. ING's Martin van Vliet points to ECB figures this week showing that bank lending to the private sector is still falling and says that until this changes, he will be "very cautious" about the pace of growth.
A second problem is the strength of the euro; its trade-weighted index has risen 10 per cent in the last 12 months, which threatens to curb the region's exports. "The last thing the euro area's nascent recovery needs is too strong a currency" says Michala Marcussen at Societe Generale.
There's also the fact that fiscal austerity will continue. The Organisation for Economic Cooperation and Development estimates that governments in the region will tighten fiscal policy by the equivalent of 0.6 per cent of GDP next year. Although less than this year's 1.3 percentage points of tightening, this still has the potential to hold back growth.
And some commentators feel that we may have not seen the end of the eurozone's troubles. "There are powerful deflationary forces holding back domestic demand," says Dario Perkins at Lombard Street Research. "If the recovery disappoints, the euro crisis will return."
