They expect the EU's new single currency to strengthen over the US dollar, with 61% liking the euro's prospects during the coming year, versus 28% choosing the dollar.

The Merrill Lynch Gallup Global survey for June polled 67 financial institutions responsible for assets totalling $1,085bn.

And their views were backed up by a report from the Bank for International Settlements, the central bankers' organisation. It said that on a purchasing power basis the dollar was signficantly over-valued.

"Investor enthusiasm for the euro is based on expectations of significantly more restrictive monetary policy in the euro-zone," said Bryan Allworthy, European equity strategist at Merrill Lynch in London.

He said most of the fund managers surveyed expected the European Central Bank to operate a "tighter-than-necessary policy to gain credibility in the financial markets as quickly as possible."

Despite the prospect of a hard euro, analysts believe that corporate profits in Europe will grow, boosted by high domestic demand and further corporate restructuring.