Bank of America CorporationEuropean stocks were downgraded from neutral to negative, and the bank's equity strategists said the macro background was changing from "Goldilocks" to the opposite.

Headwinds such as slower growth and higher discount rates could cause the Stoxx 600 to fall 10 per cent to 420 by the end of the year, Sebastian Raedler and colleagues said in a report.

They turned to low-end cars, capital goods and financial stocks.

They also highlighted other challenges, such as energy shortages and ongoing supply chain constraints.

The report follows the release of eurozone PMI data for September, which showed that the eurozone's growth momentum was losing faster than expected.