(Bloomberg News) Equities will have double-digit percentage growth in 2011 as earnings climb to a record, and investors should buy shares that rely most on growth and those that exaggerate market moves, Goldman Sachs Group Inc. said.

The U.S. economy is gaining momentum, which will offset higher interest rates in emerging markets and the sovereign-debt crisis in Europe, strategists David Kostin and Peter Oppenheimer told clients at a presentation in London today.

"The risks are all to the upside, not the downside," Kostin, who forecasts the Standard & Poor's 500 Index may climb 16% through year-end from yesterday's level, said at the event. "We are pro-cyclical and pro-beta," he said, referring respectively to stocks that benefit the most from economic growth and those that gain disproportionately when markets rise. Kostin, based in New York, is the bank's chief U.S. equity strategist.

The S&P 500 has surged 91% since sliding to a 12-year low in March 2009 amid growth in developing nations and as the U.S. Federal Reserve nurtured the domestic recovery with bond purchases. Profits at companies in the benchmark gauge for U.S. stocks rose 33% last year, according to analyst estimates compiled by Bloomberg.

'More Balanced'

"Growth globally is likely to be more balanced, in particular with quite a strong recovery in the U.S. economy, driven by slower deleveraging and an improvement in domestic demand," Oppenheimer, Goldman Sachs's European equity strategist, said in an interview before the presentation. "While there is some moderation in some of the largest emerging economies, we see this as temporary, reflecting policy tightening."

Oppenheimer forecasts the Stoxx Europe 600 Index may climb 24% in 2011. That's more than twice times the 11% average call of 15 strategists surveyed by Bloomberg at the end of last year. For U.S.-based investors, the prediction could translate to a 43% jump as the New York-based bank expects the euro to appreciate against the dollar this year, the strategist wrote in a report this month.

Goldman Sachs, the most profitable securities firm in Wall Street history, forecast S&P 500 earnings may expand by 15% to $96 a share in 2011, higher than the $92.75 average estimate in a Bloomberg survey. European earnings may increase 25% as the region's companies boost sales overseas, according to Goldman Sachs.