Chip Mason, chairman and chief executive of US-listed asset manager Legg Mason, said his group might buy a European equity manager.

"We have global aspirations," he said. "But I'm not sure we can get there without an acquisition in Europe. We aren't as strong in equities there as in the US." Mason's designated successor, Jim Hirschmann, agreed Legg could benefit by making an acquisition bringing in UK and European equity expertise. He stressed, however, this was a longer-term aspiration rather than a firm plan. Hirschmann is chief executive of bond manager Western Asset, Legg's largest fund management division. He said Western's success in Europe was boosted by its acquisition in 1996 of London-based Lehman Brothers Global Asset Management. Western further developed its Asian bond platform in 2000 through the purchase of Rothschild Asset Management's Singapore-based operation. Legg's shares fell almost 40% from their February peak of $140 after Mason warned in October that analysts' earnings expectations were too high in the wake of the group's purchase of Citigroup Asset Management. The shares have recovered to $95 as analysts started to take account of the long-term prospects. Wachovia analysts have upgraded the stock to an outperform rating: "We believe Legg has some emerging earning levers and is becoming more attractive as a recovery stock," they said. Mason maintains longer-term prospects are excellent, with the Citigroup integration nearly complete. He said preferred provider agreements with Citigroup would boost the marketing of Legg products around the world. Western plans to roll out new retail funds to take advantage of Citigroup's distribution deal. Most of Citigroup's bond division has been handed to Western. Its US mutual fund division has become a new company, ClearBridge, and its Asian equity operation has been made separate.