"You may want to be buying the stories when they are de- rated and the hopes and dreams have turned to disappointment," she said. "I like looking through the ash and finding jewels."

Reports last month showed U.S. consumer confidence rose more than forecast in January, while the Institute of Supply Management-Chicago Inc.'s gauge of business expansion rose to the highest level since 1988. German unemployment fell to an 18- year low in January, and European retail sales increased at the fastest rate in more than four years.

Economic Surprises

Citigroup Inc.'s Economic Surprise Index for the U.S., a gauge of how much reports are exceeding the median economist estimates in Bloomberg News surveys, advanced to 40 from 26 a year ago, while the gauge for Europe has jumped to 52 from 10. The emerging-market reading has dropped to 24 from 51.

The U.S. and euro zone had combined annual gross domestic product of about $27 trillion at the end of 2009, World Bank data compiled by Bloomberg show. Brazil, Russia, India and China, the biggest emerging economies known as the BRICs, had a combined GDP of about $9 trillion, the data show.

The U.S. and Europe are exceeding economic projections as the Federal Reserve and European Central Bank keep benchmark interest rates at record lows to spur growth. Meanwhile, central banks in the BRIC countries are tightening monetary policy.

Central Banks

Brazil's central bank lifted its benchmark overnight rate by 50 basis points, or 0.5 percentage point, to 11.25% on Jan. 19. India raised rates to the highest in two years on Jan. 25 and signaled more increases. China has ordered lenders to set aside more money as reserves four times since October and raised interest rates twice in the fourth quarter. Russia increased banks' reserve requirements for the first time since 2009 on Jan. 31 to stem the fastest inflation in a year.

"The global environment has really changed," said Maarten-Jan Bakkum, an emerging-markets strategist at ING Investment Management in The Hauge, which oversees about $511 billion. "After years of disappointment on growth in the U.S and Europe, expectations have improved. We are in an environment where emerging markets will probably struggle relative to developed markets."

The MSCI World gauge of advanced-nation equities beat the MSCI Emerging Markets Index by 5.5 percentage points this year through yesterday, after trailing by 51 percentage points from the start of the global bull market in March 2009 through the end of 2010. Europe's Stoxx 600 Banks index rallied 8.6% in January as China and Japan pledged to keep buying the region's bonds, easing concern the debt crisis will spread.