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Bob Doll: ‘Europe Is the Most Important Risk in 2012′

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Europe's debt crisis remains a thorn in the side of investors, and fears are creeping back that the euro zone is in crisis mode.

Consider that Italian bond yields topped the crucial the 7% mark on Thursday, and the euro currency dropped to its lowest level against the dollar in 15 months. That has Bob Doll, BlackRock's chief investment strategist, concerned.

"Europe is the most important risk in 2012," Doll tells Henry Blodget in the above clip.

The European Union's leaders, led by Germany's Angela Merkel and France's Nicolas Sarkozy, have pledged to work together to bring more cohesion to the 17-member bloc, and EU governments and the European Central Bank are determined to prevent the interest rates of Italy and Spain from rising to levels that forced Greece to ask for a rescue package. The ECB cut interest rates two times in the fourth quarter of last year and has been offering banks unprecedented deals to persuade them to keep lending.

Still, deep austerity measures, cash injections and low-interest loans may not be enough to stop France from losing its AAA rating by way of Standard & Poor's. The European Commission cut its 2012 growth forecast last November by more than half, and many euro zone governments are auctioning off new bonds to raise an estimated $2.43 trillion by April.

Doll says the actions taken by European pols and the ECB will truncate the crisis, but not eliminate the possibility of dragging the world into slow growth.

"As long as the euro holds together, the recession in Europe, which has already started, will be a mild one," Doll says. "If there's financial -- not economic -- contagion to the U.S., then all bets are off for our economy staying healthy."

According to Doll, the biggest factor holding back Europe from resolving its debt problems is the current structure of the euro zone. The 17 countries using the currency share the same central bank and monetary policy, but they differ in their approaches to cutting costs.

"I think that restructuring is absolutely necessary in some way, shape or form," he says. "Europe is going to be a sloppy mess, but I think we'll get through it."