By Samuel Indyk

LONDON (Reuters) - Central bank policy tightening, fears of a recession and the economic impact of the war in Ukraine are all expected to keep a lid on any significant advance in European stocks for the remainder of 2022, a Reuters poll found.

The poll of 21 fund managers, strategists and analysts, surveyed over the past two weeks, forecast the pan-European STOXX 600 index would reach 450 points by the end of the year, a 3.1% gain from Monday's close.

European shares have sunk over 10% so far this year, suffering their worst start to a year since the COVID outbreak in 2020 and their second-worst start since 2008.

Graphic: STOXX 600 year to date - https://fingfx.thomsonreuters.com/gfx/mkt/xmpjoxndkvr/Pasted%20image%201653380583417.png

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The decline in European stocks comes despite an upbeat first-quarter reporting season that is expected to show a 41.5% jump in earnings, according to Refinitiv I/B/E/S data. Excluding the energy sector, earnings are expected to have risen 22.4%.

But the outlook remains uncertain, with regional equities facing a number of headwinds moving towards the second half that cloud the prospects for earnings growth.

The ongoing war in Ukraine, persistent inflation and increased recession risk are all factors adding to the uncertain backdrop, according to Stephane Ekolo, global equity strategist at Tradition.

"We are still wary on equities given the very difficult geopolitical and macro backdrop coupled with a risk of margins pressures," said Ekolo, who forecast the STOXX 600 index would drop approximately 55 points to 380 by the end of the year.

One of the main risks cited by poll respondents was the speed at which central banks, including the European Central Bank (ECB), are expected to tighten policy throughout the year to rein inflation in. [ECILT/EU]

European Central Bank President Christine Lagarde said on Tuesday she saw the ECB's deposit rate at zero or "slightly above" by the end of September, implying an increase of at least 50 basis points from its current level.

Money markets are pricing in over 100 basis points of ECB interest rate hikes by the end of the year.

"The ECB moving aggressively on monetary policy, especially when a growth slowdown is expected will weigh negatively on the region," said Philipp Lisibach, chief global strategist at Credit Suisse.

Lisibach also highlighted prolonged higher energy prices, a spillover or escalation of the Ukraine conflict and a stronger euro as key risks to the outlook for euro zone equities.