Europe stocks cheapest to U.S. since 2004

The Stoxx Europe 600 Index trades at 1.43 times book value, or assets minus liabilities, after falling 11 percent last year. That compares with 2.14 for the Standard & Poor's 500 Index, according to data compiled by Bloomberg. The European gauge has been at least 30 percent cheaper for 69 straight days, the longest stretch in seven years. Economists forecast U.S. gross domestic product will expand 2.3 percent in 2012, compared with a 0.2 percent contraction in Europe .

According to Bloomberg, Bulls say the gap provides the opportunity to buy bargains because profits among companies in the Stoxx 600 will rise an average of 9.8 percent in the next two years, bolstered by the growing American economy. U.S. GDP grew twice as fast as the euro zone in 2003 when equities began a five-year bull market . Bears say budget deficits will keep both regions from rebounding and that a recession in Europe will lead to losses everywhere.

"Even though the euro zone may be the largest economic bloc, the U.S. is the single largest country as an economy, so if we're doing better there's going to be an effect that's going to benefit other areas of the world," Mike Ryan, New York-based chief investment strategist at UBS Wealth Management Americas, which oversees $715 billion, said in a Jan. 19 phone interview. "It certainly does no harm and likely does good."

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