Retail investors in Europe are providing a useful liquidity boost to the equity markets as the level of demand for equity funds matches the early part of 1999, according to new research from Citigroup Smith Barney.

In the bank's latest European Portfolio Strategist report, Robert Buckland, European equity strategist at Citigroup Smith Barney, said: "Many of our clients worry about the equity market's ability to absorb the ever-expected flood of new equity issuance. While there may be a flood of issuance in the final part of the year, we estimate that in Europe, flows into equity funds in the second quarter exceeded the amount of new equity supply during that period."