Believe him or not? Stocks to Surge in 2009, UBS Says; S&P 500 May Climb 53 Percent

"Stocks in the U.S. and Europe will withstand a “full-blown” global recession to surge in 2009, UBS AG said.

The Standard & Poor’s 500 Index may jump to 1,300 by the end of 2009, a 53 percent rally from its current level, New York-based strategist David Bianco wrote in a report dated yesterday.

“The consensus outlook for 2009 is a full year of gloom,” Bianco wrote. “We believe 2009 will bring signs of a dawn in confidence with the first faint light appearing earlier than most investors expect.”

European per-share earnings will tumble 25 percent as the euro-zone economy contracts 0.9 percent, according to UBS strategists in London led by Nick Nelson. Still, price-earnings valuations may climb to lift the FTSEurofirst 300 Index 25 percent from current levels, Nelson’s team forecast.

The U.K.’s FTSE 100 Index may advance 41 percent to 5,800, UBS said in a separate note.

“The macroeconomic and corporate profit outlook for 2009 is horrible,” Nelson’s team wrote. “But share prices have moved well ahead of this and are now pricing in a multi year recession/depression.”

The brokerage also forecast gains for Latin American markets, and recommended Brazilian equities."