Investors have begun to show pre-Lehman levels of risk appetite this month as they surged out of defensive stocks, despite most still being underweight in equities, according to the monthly Merrill Lynch Survey of Fund Managers.

Gary Baker, co-head of international investment strategy at Banc of America Securities - Merrill Lynch Research said: "I knew this paring back of defensive stocks would happen, but I did not think it would happen as quickly as this four week period."