China's outbound investment increased 14 percent in 2012, with Europe being the top destination for Chinese investors, an industry report said Tuesday.

Outbound investments by Chinese companies rose to US$77.2 billion in 2012 from US$68 billion in the previous year, with mergers and acquisitions taking up 49 percent of the total, a 44-percent gain from 2011, A Capital, a private equity fund based in Beijing and Brussels, said in a report yesterday.

The equity fund predicted that Chinese investors will invest US$600 billion more in overseas markets in the next three years.

In 2012, Europe attracted the most investment of US$12.6 billion from China, up 21 percent from 2011, more than doubled the US$5.4-billion investments to the United States, according to the report.

"Investments into Europe are expected to remain strong due to low valuations on weak growth prospects, the absence of regulatory hurdles, and the strategic match between sectors of interest for Chinese investors and the European economy, in particular in sectors linked with urbanization," the report said.

Chinese investments in Asia fell, with M&As down 65 percent, the report said.