European stocks are likely to see further short-term losses as the financial crisis continues to erode investor confidence in economic activity, but will stage a strong rebound next year, says Peter Oppenheimer, chief European strategist at Goldman Sachs.

He believes the consensus forecast of 9 per cent earnings growth in Europe next year – with rising margins – is unrealistic. “We now see profits falling slightly in 2008,” he says. “Crucially, we also expect a small fall in margins.”