After last year’s turmoils, there are mixed reports on how and if the Euro-zone market is to perform over the course of this year.

It is entering an interesting phase and the EU summit that was held at the end of last month is likely to shape how it moves forward for the remainder of 2011 and beyond.

With persistently high unemployment, threat of deflation, stagnating consumption and falling construction, EU economies face several quarters of fragile economic growth, sluggish fixed investment and a volatile exchange rate.

On the upside, the industrial output continues to rise and economic sentiment has stabilised.

Generally European equities have risen, led by oil equipment and industrial groups. as new figures showed a continued improvement in the continent’s business climate.

Growing order books have pushed up the Business Climate Indicator, used by the European Commission to gauge business cycles, and this rose close to its peak set previously in 2007.

There could be a cost to pay if Europe continues to muddle through and postpone trouble rather than deal with the well-published debt issues, such as over the last 24 months in dealing with the Greek predicament.

The consequences, should the EU continue with its liquidity approach for solvency issues, could very well mean that private investors will reduce their exposure to this steady problem area.

However, brokers are reporting stronger inflows in European assets towards more developed market economies, at the same time reducing their exposure to emerging markets assets.

This can be seen in the market prices; the Eurostoxx 50 index has risen almost nine per cent so far in 2011 against 6 per cent for the S&P 500 or three per cent for the FTSE 100 index.

There is a danger though that the crisis may continue from country to country with Portugal, already suffering from high funding costs, making a formal request for bailout last week.

The point where an activation of the EFSF (European Financial Stability Facility) becomes economically sensible might not be far away for some other European countries. On a positive note The EFSF has doubled in size over the past 12 months so it could support the likes of Spain and Italy, if required. The Spanish finance minister has recently stated that Spain will not be asking for support.