European investment bankers are beginning to sense a shift in sentiment among investors, with appetite for higher yields creating a sustained move into equities for the first time since the middle of 2008 and demand for riskier credit in the financial and sovereign sectors.

Last week, the FTSE 100 index hit levels not seen since May 2008. The S&P 500 is currently hovering around a five-year high. According to data from research company EFPR, inflows into global equity funds were the highest since 2007.