July saw a steep fall in sentiment towards eurozone shares and actual market returns have so far painted an equally bleak picture, according to the Lloyds Bank Private Banking Investor Sentiment Index.

UK sentiment towards eurozone shares took a dive this month as investors gravitated towards “safe haven” assets amid uncertainties over Greece's debt crisis, according to research by Lloyds Bank Private Banking.

Net investor sentiment for eurozone shares fell 19 percentage points from June and 30 percentage points from a year ago to -48 per cent – the largest annual fall in sentiment since March 2013.

The bank referred to a “bleed-across" from eurozone shares as sentiment towards UK shares reverted to pre-election levels, falling 12 percentage points from last July to 26 per cent.

“The significant jump we saw last month for UK shares also shows that the euphoria post-general election is moderating and correcting back to pre-election levels,” said Ashish Misra, head of portfolio specialists at Lloyds Bank Private Banking. 

Meanwhile, as China's stock market tumbled, emerging market shares saw the third largest decrease to 10 per cent in July.

Market volatilities appeared to have boosted the appeal of “safe haven” asset classes as gold and UK government bonds became the only asset classes to record a pick-up in sentiment in July, rising 6 percentage points and 2 percentage points respectively from June, to 36 per cent and 19 per cent. Misra said such flight-to-safety behaviour was typical of investors in such market conditions.

“Overall, despite the results making for some bleak reading, we may see, at best, a visible pop-up in performance next month for eurozone shares, or at worse, a flat lining of results,” he said.

July's actual market returns so far reflect the gloomy sentiment, with nine out of ten asset classes reporting a decrease over the past month. All but UK government bonds, which generated a 0.4 per cent growth, saw a dip in returns earned.

Lloyds Bank Private Banking took its data from a survey of 4,259 adults in the UK, of which 1,142 were investors.