Despite recent optimism among many European investment bankers and analysts, the Euro market has not been weathering U.S. subprime woes as well as anticipated. Their recent contention that there is room for growth in non-real estate asset classes may not dovetail with the current scenario of jittery investors, negative news coverage and questionable ratings changes.

"Lurid headlines emanating from the subprime fallout in the U.S. are impacting ABS trading and the perception of risk in European MBS bonds," said Dave Colling, Markit's director of structured finance. "During the summer holiday season, it's easier for a junior trader to do nothing than take on a risk position in a product that continues to attract negative media commentary."

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