By Blaise Robinson

PARIS (Reuters) – European stocks dipped on Friday but remained on track to post their best monthly performance in over three years, lifted by hopes the European Central Bank’s quantitative easing programme will revive the region’s economic growth and corporate earnings.

The FTSEurofirst 300 (.FTEU3) index of top European shares was set to record a gain of 7.1 percent for January, its biggest since October 2011. It has strongly outpaced Wall Street, where the S&P 500 (.SPX) has lost 2.3 percent since the start of the year.

Morgan Stanley strategists upgraded their forecast for European earnings for the first time in three years, seeing an improvement in the region’s economic momentum this year.

“After four years of persistent growth disappointment, we believe that Europe is on the verge of an upgrade cycle. This will be one of the dominant factors influencing investment returns in Europe this year,” they said in a note.

“European net earnings revisions have been in negative territory since March 2011. Over the next 1-2 months we believe this series is likely to move into positive territory as analysts adjust their forecasts for the significant moves we’ve seen in FX, rates and the oil price.”

Global asset managers have started to increase their exposure to European stocks, betting on a QE-driven rally and an improvement in corporate margins from the weakened currency and lower energy costs.

During the past week, European equities have enjoyed $ 5.1 billion of investment inflows, the biggest weekly amount since December 2013, according to data from BofA Merrill Lynch Global Research. European stocks have attracted $ 7.2 billion in fresh money so far this year.

At 1430 GMT, the FTSEurofirst 300 (.FTEU3) index of top European shares was down 0.2 percent on the day, at 1,469.73 points, marking a pause in its recent sharp rally.

“It’s a little pause ahead of the weekend, but there’s no real selling pressure and technically, charts show that indexes are still in a bullish trend,” Saxo Bank trader Andrea Tueni said.

“People are just cautious, with a couple of potential negative catalysts like Russia and Greece in mind, so it’s tempting to book profits.”

Banca Monte dei Paschi di Siena (BMPS.MI) featured among the top losers, down 8 percent after sources said a planned capital increase at the lender might be bigger than expected. The troubled Italian bank is considering raising the size of its capital hike to around 3.5 billion euros (2.66 billion pounds), one billion euros more than initially planned, the sources said.

Around Europe, Britain’s FTSE 100 index (.FTSE) was down 0.3 percent, Germany’s DAX index (.GDAXI) down 0.2 percent, and France’s CAC 40 (.FCHI) was off 0.4 percent.

Greek banking shares outperformed, recouping some of the losses suffered earlier in the week following the election victory of anti-bailout party Syriza and the new government’s cancellation of privatisation plans.

The Athens Stock Exchange FTSE Banks Index (.FTATBNK) was up 1.7 percent, with Bank of Piraeus (BOPr.AT) up 2.9 percent and Alpha Bank (ACBr.AT) up 5.9 percent.

However, the broader Athens ATG (.ATG) benchmark equity index was down 0.8 percent, set to post a loss of 13.7 percent on the week.

Today’s European research round-up [RCH/EUROPE]

(Editing by Mark Trevelyan)