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Eurozone Stocks Climb Higher but Region Remains on Thin Ice: Russell Indexes and Russell Investments

SEATTLE, WA -- (Marketwired) -- 01/17/14 -- The Russell Eurozone Index returned 0.7% in the first ten days of 2014, following a gain of nearly 25% in 2013, but Russell strategists warn that cracks may appear if deflation gathers strength.

As of January 10, Greece was the Index's top performing country constituent year to date. It returned 10.7% with Portugal returning 7.3% and Austria posting a 5.2% gain. Russell Eurozone Index country constituents Germany (-0.5%), France (-0.7%) and Luxembourg (-1.3%) had negative year-to-date 2014 returns as of January 10.

Strategists at Russell Investments see continued growth in the Eurozone in 2014 but believe the region may not be a simple "buy and hold."

"Despite positive recent performance, the Eurozone remains on thin ice. As deflationary forces gather strength, the pressure builds and cracks appear. Our biggest worry for 2014 is the weak condition of banks, their toxic connection to governments and the negative impact on growth from a lack of credit. On the other side of the equation, reflationary policies such as less austerity and continued central bank support should keep the ice from breaking, particularly in light of Mario Draghi's renewed pledge to maintain an accomodative monetary policy for the foreseeable future," said Wouter Sturkenboom, investment strategist with Russell Investments Europe.

Russell Investments global team of investment strategists, in its recently released 2014 Annual Global Outlook, shares its view on potential prospects for global equities, including the euro zone, and prospects for the coming year.


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Index                                    2014 YTD a/o Jan 10      2013
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Russell Eurozone Index                           0.7%             24.9%
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Russell Global ex-US Index                       0.1%             11.8%
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Russell 3000 Index                               0.7%             27.8%
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Russell Eurozone Index - Greece                 10.7%             24.3%
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Russell Eurozone Index - Portugal                7.3%             22.8%
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Russell Eurozone Index - Austria                 5.2%             10.9%
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Russell Eurozone Index - Spain                   3.9%             27.4%
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Russell Eurozone Index - Italy                   3.6%             22.8%
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Russell Eurozone Index - Ireland                 3.4%             41.4%
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Russell Eurozone Index - Finland                 1.3%             35.5%
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Russell Eurozone Index - Netherlands             0.9%             19.9%
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Russell Eurozone Index - Germany                -0.5%             26.9%
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Russell Eurozone Index - France                 -0.7%             23.8%
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Russell Eurozone Index - Luxembourg             -1.3%             11.3%
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Source: Russell Investments. Returns are total returns (reflect reinvestment of dividends and distributions) and are euro-denominated.

The Russell Global Index measures the performance of the global equity market based on all investable equity securities, and is constructed to provide a comprehensive and unbiased barometer for the global segment, The Index includes more than 10,000 securities in 47 countries, and covers 98% of the investable global market. All securities in the Russell Global Index are classified according to size, region, country and sector; as a result the index can be segmented into more than 300 distinct benchmarks.

Please note: Indexes are unmanaged and cannot be invested in directly. Returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment. Russell's publication of the Indexes or Index constituents in no way suggests or implies a representation or opinion by Russell as to the attractiveness of investing in a particular security. Inclusion of a security in an Index is not a promotion, sponsorship or endorsement of a security by Russell and Russell makes no representation, warranty or guarantee with respect to the performance of any security included in a Russell Index.

Opinions expressed by Mr. Sturkenboom reflect market performance as of January 10, 2014 and are subject to change at any time based on market or other conditions without notice. Past performance does not guarantee future performance.

This material is not an offer, solicitation or recommendation to purchase any security.

Nothing contained in this material is intended to constitute legal, tax, securities or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax and investment advice from a licensed professional. The information, analysis and opinions expressed herein are for general information only and are not intended to provide specific advice or recommendations for any individual entity.

Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company.

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