London: Optimism that the UK won’t crash out of the European Union without a deal is fuelling the biggest inflows into European stocks since early 2018.

Investors put $300 million into the region’s stock funds in the week through October 23, the first break from outflows in 16 weeks and the largest addition since February 2018, Bank of America Corp said in a note, citing EPFR Global data. Since the start of the year, European equity funds have lost $103 billion.

European equity fund inflows in the past week stand in contrast to the exodus from other major regional stock funds, including the US and emerging markets. The sudden appetite for the world’s least popular stocks could be a sign that investor sentiment is improving as a result of reduced fear that a no-deal Brexit would lead to an economic downturn in the UK and Europe.

Separately, UBS Global Wealth Management has closed its underweight position on British stocks, Chief Investment Officer Mark Haefele wrote in a note to clients, because of the reduced prospects of a no-deal departure and “attractive” valuations relative to global stocks.

Record inflows into UK equity exchange-traded funds could be part of the reason for the turnaround in European equity data. The Vanguard FTSE 250 UCITS ETF, which tracks the benchmark index of mid-cap British firms that are more sensitive to domestic growth, saw historically high inflows throughout this week. The iShares Core FTSE 100 UCITS ETF, which follows the benchmark gauge of large UK companies, also experienced inflows.

Prime Minister Boris Johnson won broad support for his Brexit deal in Parliament on Tuesday and is now making a bid for a Dec. 12 snap election. However, his opponents want to rule out a no-deal Brexit first. The pound was little changed on Friday, the FTSE 100 Index retreated 0.5 per cent and the Stoxx Europe 600 was down 0.3 per cent.