Defaults by European companies are expected to fall to their lowest level since the collapse of US investment bank Lehman Brothers by the end of the year in a “temporary respite” for the market.

Ratings agency Standard & Poor's expected the default rate to drop to about 4% by the end of the month, taking it to below its long-term 4.3% average for the first time since the fourth quarter of 2008. It added it expected defaults to fall to 3.8% by the end of next year.