Some investors who have heavily underweighted euro zone assets may have more reasons to change their mind in the coming week as the resilience of the region’s economy contrasts with persistent hints of a U.S. double dip.

Given a surprisingly robust economic performance, especially in Germany, investors are becoming more sanguine about the single currency region’s sovereign debt troubles — once the biggest drag for investors in euro zone stocks and other assets.

Concerns that the U.S. economy is slowing, or possibly returning to a recession, has affected other markets, as seen in Friday’s fall in Asian and European stocks.

But long-term asset managers are looking beyond knee-jerk reactions and evaluating the risk of being overly underweight in assets from a region starting to look less ugly than its U.S. counterpart.

By way of example, mainstream fund managers polled by Bank of America Merrill Lynch this month have become overweight euro zone equities for the first time since November.

More leading indicators on the euro zone manufacturing sector and German business morale, due in the coming week, could accelerate this trend, at a time when investors are increasingly worried about the U.S. economy’s worsening prospects. (more…)

Japanese shares extended losses on Monday amid worries a strong yen would derail the fragile economic recovery, while the Australian dollar recovered after falling to a one-month low on inconclusive weekend elections.

Broad investor concerns about the global economic recovery are weighing on regional stocks which fluctuated through positive and negative territory following a string of weak economic data releases from the United States last week. (more…)

Former Republican House Speaker Newt Gingrich says Barack Obama’s policies are “artificially extending the recession.” Congressman John Boehner, the party’s leader in the House, says “stimulus policies aren’t working.” Republican Senator Jim Bunning calls Federal Reserve Chairman Ben S. Bernanke’s tenure “a failure.”

The U.S. bond market disagrees. The economy has never contracted with the difference between short- and long-term Treasury yields as wide as it is now. That gap, at 2.11 percentage points for 2- and 10-year notes, signals a 15.5 percent chance of a recession in the next year, according to the Federal Reserve Bank of Cleveland. (more…)

Malaysia’s economic expansion probably slowed last quarter from the fastest pace in a decade, as signs of cooling global growth cloud the outlook for exports.

Southeast Asia’s third-largest economy grew 8.4 percent in the three months through June from a year earlier, after expanding 10.1 percent in the first quarter, according to the median forecast of 16 economists. The central bank will release the report at 6 p.m. tomorrow. (more…)

The U.S. dollar headed toward a 15-year low against the yen on Tuesday and Japanese shares slid as weak U.S. data added to worries about a global slowdown.

Other Asian stock markets were slightly firmer although analysts said there was little reason for them to rise much higher given the weak sentiment. (more…)