March 25 Reuters Goldman Sachs on Monday raised its 2024 yearend target for Europe39;s STOXX 600 index to 540 from 510, citing potential improvement in economic growth and monetary policy easing across central banks.

The brokerage39;s new target for the panEuropean benchmark index implied a nearly 6 upside from Friday39;s close of 509.64.

If economic growth modestly accelerates and central banks embark on a ratecutting cycle in June, as our economists expect, valuations will rise further, Lilia Peytavin, portfolio strategist at Goldman Sachs said in a note.

Major central banks such as the U.S. Federal Reserve and the European Central Bank have hinted at probable interest rate cuts in June.

Recent data showed euro zone business activity was within a whisker of returning to growth in March, outperforming expectations, while the U.S. business activity held steady.

The Wall Street brokerage, which previously lifted its index target in midFebruary, now estimates the STOXX 60039;s valuation can increase about 2.5 this year.

Equities have probably reached the optimism phase, the last one of the equity cycle, in which multiples tend to rise while profit growth slows, Peytavin added.

Goldman argued that over the last six months, European equities climbed 12, and all of this rally has been driven by an improvement in valuations rather than earnings growth.

The STOXX 600 currently trades at about 15 times its oneyear forward pricetoearnings PE ratio, while the SP 500…