Germany's DAX will underperform, however, hurt in part by its strong exposure to troubled emerging markets, which have seen big swings in the value of their currencies.

The poll of 37 fund managers and strategists, taken in the past week, predicted the pan-European STOXX Europe 600 index would add almost 8 percent this year to end 2014 at 353 points, a six-year high. The euro zone's blue-chip Euro STOXX 50 index will add a little more than 6 percent, to 3,300 points, a 5 1/2-year high.

"The main factor will be the region's GDP growth, expected at 1.1 percent, with improvements seen in every country," said Gregorio de Felice, chief economist at Intesa Sanpaolo.

"Italy's MIB index should be particularly strong as it catches up after years of underperformance. It will benefit from an acceleration of reforms in Italy, with lower taxes and government spending cuts."

Milan's FTSE MIB benchmark index - which is already up almost 11 percent since the beginning of the year - is predicted to gain a further 7 percent to end the year at 22,500.

Germany's DAX - strongly exposed to emerging markets and the most vulnerable to the standoff between Russia and the West over Ukraine - will rise around 8 percent before the end of December, making a 5 percent gain for the year.

The benchmark index, home of multinationals such as industrial conglomerate Siemens, car maker Volkswagen and insurance group Allianz, has lost almost 3 percent so far in 2014, the worst performance among major European stock indexes.

"UK and German stock markets are already reaching their record highs, and their valuation levels are not attractive anymore," said Roland Kaloyan, head of European equity strategy, at Societe Generale. "On the other hand, there is still a lot of upside potential for the French and peripheral markets.

"French stocks should benefit from the recent radical change in the French government's economic policy, while political changes in Italy should also support the country's equities, which will do better than Spain's shares, strongly exposed to Latin America," Kaloyan said.

France's CAC 40 index, up about 0.3 percent so far this year, is expected to add another 8.6 percent before the end of 2014.

Spain's IBEX - whose blue-chips, such as Banco Santander and Telefonica, have significant exposure to Latin American economies - will gain over 10 percent before year's end, after rising almost 2 percent since the start of 2014.

Overall, fund managers and strategists expect a rebound in European corporate profits, which overall remain about 25 percent below their peak of 2008, while U.S. profits are already well above their 2008 peak, according to Thomson Reuters Datastream data.

European companies have been aggressively cutting costs and cleaning up balance sheets in the past few years and are set to reap the benefits as Europe's economic growth recovers. Their Profits are expected to rise 10.5 percent in 2014, Datastream figures showed.

The rally in European stocks - which are turning out to be the big winners of investors' exodus from troubled emerging markets - will also be supported by brisk investment inflows throughout the year.

According to data from EPFR Global, European stocks have attracted nearly $40 billion so far in 2014, a record start to the year. The momentum in flows is set to continue as many investors, from Middle Eastern sovereign funds to South American pension funds, still have little exposure to the region, which they deserted during the sovereign debt crisis.

(Polling by Blaise Robinson and Alexandre Boksenbaum-Granier in Paris and Atul Prakash in London, Hari Kishan and Swati Chaturvedi in Bangalore; additional reporting by Elisa Anzolin in Milan; Editing by Larry King)

By Blaise Robinson