MILANLONDON, May 23 Reuters Concerns over recession and sticky inflation will weigh on European shares over the coming months but fading policy headwinds could see the main benchmarks reach new highs next year, a Reuters poll found.

Fund managers and strategists surveyed over May 1023 forecast the regionwide STOXX Europe 600 index would drop to 435 points by the end of 2023, down 7.2 from Monday39;s close, as earnings growth slows.

Milla Savova, strategist at Bank of America Merrill Lynch, said weakening macro momentum could lead to meaningfully wider risk premia and earnings EPS downgrades before the cycle turns.

She expects the STOXX to fall as low as 365 points early in the October quarter and recover to 410 by yearend, compared to a poll range of 380490.

Once growth momentum starts to rebound in response to a fading drag from aggressive monetary tightening, we expect this to translate into a renewed rise in the STOXX 600, she said.

The STOXX has risen around 10 this year, recovering losses suffered in March following U.S. regional bank collapses and the downfall of Credit Suisse.

Strongerthanexpected earnings and the quick intervention of authorities in the United States and Switzerland to contain the banking crisis helped markets regain their footing.

But prudence is taking hold again with the European Central Bank expected to keep hiking interest rates, even as the Federal Reserve has signalled a pause and with markets largely anticipating a U.S. debt…