After a long, cold year, investors are flocking back to Europe

By Alun John and Danilo Masoni MILAN/LONDON (Reuters) - A European recession looked like a no-brainer just a few weeks ago, but that picture has changed dramatically,

and investors have started pouring money into the region's stocks, currency and bonds. Warmer temperatures and well-filled gas storage facilities mean there's less concern

about power shortages and sky-high energy bills. That, along with China reopening its economy at breakneck speed, promises a boost for Europe's export-oriented economy.

JPMorgan has raised its forecast for euro zone first-quarter economic growth to 1% from a contraction of 0.5%, echoing a similar move from Goldman Sachs earlier this month.

Data from BofA Global Research on Friday showed the first weekly inflow of investor money into European equity funds in almost a year. Markets are picking up those

positive vibes. The euro is set for its largest three-month gain against the dollar since 2011, having risen nearly 10%. European stocks have vastly outperformed their U.S.

peers. The euro STOXX benchmark has beaten its U.S. peer, the S&P 500, by over 18 percentage points since September. Morgan Stanley says this is its best outperformance in 20

years relative to Wall Street. "It's a very big move in European gas prices and that has dramatically improved the outlook. The perception has shifted from the worst kind

of contraction, especially for countries like Germany, to potentially avoiding recession," said Samy Chaar, chief economist at Lombard Odier in Geneva. "It's difficult to

see a negative. Whether it's investment-grade bonds, or equities, or the euro, it's all very good news".