Mark Marshall of Charles Stanley & Co

WHAT a difference a few weeks can make. Three months ago, equity markets were in the depths of despair. The crisis in the Europe was expected to deepen, growth forecasts were slashed and. in October. shares were sold off as politicians seemed powerless to prevent a disorderly break-up of the eurozone.

Over the past three months, a new, more confident mood has emerged. The FTSE 100 index of leading shares has rallied 16% from its low on November 23. Much of this has been due to the European Central Bank’s new cheap financing facility, made available to the banks to counter the threat of a new credit crunch.

Progress of some sort has been made to address the Greek deficit and whether or not the eurozone finance ministers meeting in Brussels manage to save Greece from default, the market is more optimistic that threat of contagion might be averted. The eurozone might just muddle through.

Adding in to the mix is growing evidence that the US economy is now showing signs of recovery. Jobs are being created at the fastest rate for some years and in the UK there is better news on inflation leading the Governor of the Bank of England to say that we might be over the worst. The drop in inflation could be positive for companies with large pension deficits and for retailers taking advantage of a recovery in consumer spending.

Of course it would be wrong to play down the headwinds facing the developed economies as these remain. The risks of a eurozone meltdown are still there. Greece could still default and Italy may be unable to pay its way, but stockmarkets are leading indicators and pointing to better times ahead.