* European blue-chips trade at 20 pct discount to U.S. peers
* Slide in euro a blessing for European exporters
By Blaise Robinson
PARIS, April 1 (Reuters) - As sovereign debt worries move to the back burner, European stocks are poised to catch up with a recent rally on Wall Street, with investors' focus turning back to the macro front while the weaker euro boosts exporters.
European equities made lofty gains in 2009 and enjoyed a solid start to the year before returning fears over Greece's shaky finances knocked back the euro and rocked stock markets around the world, halting a sharp 10-month recovery rally.
The worries especially hit European equities, with the Euro STOXX 50 index, home of continental blue-chips such as Deutsche Bank, Philips and Repsol YPF, losing 1.2 percent in the first quarter while the Dow Jones industrial average and the S&P 500 respectively gained 4.1 percent and 4.9 percent over the same period.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For graphic on European blue-chips performance versus U.S. peers: http://graphics.thomsonreuters.com/10/04/EZ_ERUS0310.jpg For graphic on European industrials stock performance versus the euro: http://graphics.thomsonreuters.com/10/04/EZ_INER0310.jpg ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
But after last week's deal under which the European Union and the International Monetary Fund would bail out Greece as a last resort, investors' nerves about the risk of a euro zone country default eased.
A number of analysts say European stocks are ripe for a relief rally.
"The Greek crisis has clearly heightened risk aversion," said Philippe Waechter, head of economic research at Natixis Asset Management.
"But if you look at the fundamentals, the bottom line is: macro landscape in Europe is quite positive, and corporate results in the latest earnings season were also supportive. So now with the Greek issue behind us, we should see some catch up in European shares," he said.
Data on Thursday showed manufacturing activity in the euro zone grew last month at its fastest pace in over three years, and faster than previously recorded.
Analysts and fund managers also point to the gap in valuation between European stocks and their U.S. peers, which has been widening over the past few weeks.
According to Thomson Reuters data, shares in the STOXX Euro 50 currently trade at an average of 14.1 times earnings, a 20 percent discount compared with a price-to-earnings (P/E) ratio of 17.5 for the S&P 500, and a 15 percent discount compared with a P/E of 16.6 for the Dow.
At the end of December, the European blue-chip index's P/E represented a 7.6 percent discount to the S&P's P/E and a 3.6 percent premium to the Dow's P/E, while at the end of September, European blue-chips' P/E represented a 13 percent discount to the S&P 500's and a 3.7 percent discount to the Dow's.
"All the catalysts are in place for a rally in risky assets such as equities, but fears over government deficits such as Greece's have been limiting investors' appetite," said Philippe-Henri Burlisson, core management director of Groupama Asset Management, which is "overweight" on European stocks.
"The market has been pricing in a grim outcome to the Greek crisis. In our view, when the market overreacts like this, it offers good buying opportunities," he said.
SLIDING EURO A BLESSING FOR EXPORTERS The Greek crisis might have ruined investors' appetite for risky assets initially, but by dragging down the euro, it had a positive effect on European exporters, which have been hamstrung by a strong currency over the past two years.
"Shares of exporters are clearly in vogue, that's what we've been buying for a week," said David Thebault, head of quantitative sales trading at Global Equities.
"In Europe, there are a lot of companies with more than 60 percent of their revenues in dollar, such as Technip, Vallourec , Saipem, Inbev, Infineon and LVMH."
Last month, when both the euro and the broad European market were battered by Greek fiscal fears, shares of currency-sensitive EADS outperformed, and the stock is up nearly 30 percent since November.
EADS CEO Louis Gallois has said in the past that every 10 cents rise in the euro against the dollar cost the company 1 billion euros in annual operating profit. Conversely a slide in the European currency is a blessing for exporters.
"That's just the kind of breathing space these companies needed," Thebault said. (Graphic by Scott Barber; Editing by David Cowell)