Plummeting insurance stocks in Europe will lift as demand for insurance services rise in the wake of the New York disaster, according to leading analysts. Munich Re, Swiss Re and other European insurance leaders saw their values heading rapidly south after the terrorist attacks.

But an analyst at the company said investors are over-reacting. “Tragic as the events [in New York] are, the market has over-reacted in the context of most European insurance stocks,” he said.

One analyst suggested that the “small supply and large demand” for reinsurance in the wake of the September 11 disaster will lead to price increases. He said Munich Re and Swiss Re could emerge as among the best investments in the world.