Bank of America Merrill Lynch (BAML) said that the top-line recovery across the European banking sector should be the most striking in the UK, helped by the ongoing improvement in the macro-economic picture.Following its 18th annual European Banking and Insurance Chief Executive Officer conference last week, BAML said that investors were moderately 'overweight' European banks with a broad spread of view on which countries would be most likely to outperform."Investor expectations around the domestic UK banks have been stable over the last 12 months," analysts said.When asked which banks are expected to outperform over the next 12 months, investors surveyed said UK domestics were second only to the Investment Banks, with the proportion of investors expecting outperformance consistent year-on-year."Helping explain the preference for the UK banks is the economy recovery underway currently. As we show in the margin. Investors expect the UK economic recovery to continue in 2014, with gross domestic product (GDP) [growth] of 1-2%, house price inflation of 1-5% and loan growth of 1-3%," BAML said."With our economist forecasting 2.2% UK GDP [growth] and house prices already growing at 5%, the responses suggest that there may be upside to investors macro expectations, which could feed through positively to share prices."Analysts picked out Lloyds (rated 'buy') as one of the banks that should benefit from this recovery.The stock was down 0.95% at 73.53p by 10:14 on Monday.BC