DAVOS, Switzerland (Reuters) -There is too much pessimism around Europe and it could be time to be investing back in the region, BlackRock CEO Larry Fink said at the World Economic Forum annual meeting on Friday.

Euro zone business began the new year with a modest return to growth as stable services activity in January was complemented by an easing of the long-running downturn in manufacturing, a survey released earlier on Friday showed.

"There's too much pessimism on Europe," Fink said during a panel debate on the global economic outlook in Davos.

"I believe it's probably time to be investing back into Europe," he said, adding there was still progress to be made in areas such as capital markets union.

On the same panel, IMF Managing Director Kristalina Georgieva and ECB President Christine Lagarde agreed Europe needed to better mobilise capital to boost its economy.

"We need to keep the talents at home, we need to keep the savings at home," said Lagarde, who characterised the global economic challenges facing Europe as Donald Trump's new presidency begins as representing "an existential threat".

"If European leaders can get their act together and respond to this existential threat, there is a huge potential for Europe to respond to the call," she said.

Speaking about the outlook for U.S. inflation, BlackRock's Fink said he was not too worried, adding that the U.S. Treasury yield curve reflected expectations for higher inflation and also fiscal deficits.

The benchmark U.S. 10-year Treasury yield, trading at 4.64%, has risen from lows of around 3.60% in September.

"I can see a scenario, I am not calling for it, where we see 5.5% on the 10-year (U.S.) yields," Fink said.

(Reporting by Dhara Ranasinghe and Balazs Koranyi; Editing by Amanda Cooper and Alexander Smith)