Barclays lifts STOXX 600 target as Germany boosts fiscal spending

(Reuters) -Barclays raised its year-end target for Europe's benchmark STOXX 600 index on Wednesday, as Germany's fiscal reform will raise long-term growth prospects for the region.

The brokerage raised its forecast for the benchmark to 580 from 545 points, an upside of 4.6% to the index's last close.

Germany's parliament approved plans for a massive spending surge of about 500 billion euros ($546 billion) on Tuesday, throwing off decades of fiscal conservatism in hopes of reviving economic growth and scaling up military spending.

Barclays sees a fiscal-driven boost for Germany and the euro area for 2026 and beyond, even as U.S. tariffs hit in the near term.

The brokerage maintained its earnings per share growth forecast of 4% for STOXX 600 in 2025, while lifting its 2026 estimate to 8% from 4%. It does not expect a recession in the U.S. and said EU equities may hold relatively better this time around even though they are not immune to a growth scare.

"Rising trade barriers and increasing policy uncertainty may be pushing investors to rebalance further away from U.S. to Europe."

Investors are growing more nervous that trade tensions between the U.S. and Europe would escalate after the European Union retaliated against blanket U.S. tariffs on steel and aluminium.

(Reporting by Joel Jose in Bengaluru; Editing by Mrigank Dhaniwala)

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