MILAN, July 31 Reuters European travel stocks stumbled into some profittaking as earnings season kicked off and extreme weather hit in July, but many investors are betting relatively attractive valuations and solid demand will keep supporting the sector.

An index of European travel and leisure stocks has risen 33 over the last year, beating even market favourites like luxury and defence and racing over 23 percentage points ahead of the broader market.

The index has fallen slightly from its May peaks, but is still one of the best performers this year, thanks to sharper price increases in items like airline tickets and hotel rates as COVID19 curbs were phased out ahead of the summer holidays.

For many people, the pandemic is now over, and this is time now for travelling far from home, said Corinne Martin, fund manager at Ofi Invest in Paris.

Airlines, cruise operators and hotel owners have been key beneficiaries, but so have aircraft and enginemakers. The recovery in longhaul flying helped RollsRoyce lift its fullyear forecasts, sending its shares up over 20 on Wednesday.

The number of restrictionfree countries has risen threefold in one year to above 180 and international tourist arrivals are closing in on prepanademic levels, according to data from the World Tourism Organization. Europe is among the regions with most progress.

The point at which China announced the end of health restrictions in 2022 was probably the best moment to jump into travel stocks. The…