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Financial markets in Europe are outstripping their US counterpart in most transaction areas, research by IFSL has revealed.

As the global markets continue to wrestle with turmoil, a survey by International Financial Services London showed that in half of the activities, including commercial and international banking, insurance premiums, foreign exchange trading, over-the-counter derivatives trading, and trading of foreign equities activity in Europe far outpaces the US.

The largest gains in Europe have been in management of hedge fund assets and issuance of domestic bonds. Europe has also made some large relative gains since 2001 in sectors where it has the larger market including cross border bank lending, issuance of international bonds, IPOs and insurance premiums.

However, according to the report the US has made up ground in a few areas in recent years, particularly foreign equity trading, where the gap with Europe has been largely closed, as well as OTC derivatives where the continent's lead has been curtailed.

The US remains ahead in the retirement stakes with American pension fund assets standing at four times that of Europe while US insurance assets are 30 per cent less than Europe's. A fact the report attributes to higher premium income on the continent when compared to the US.

Despite concerns expressed elsewhere about the dominance of London as a global centre of finance, the report stated: "The overall trend over a number of years demonstrates London's continuing importance as the capital for many of Europe's wholesale financial markets."