European shares sell off on ECB inaction
* FTSEurofirst down 1.1 pct, Euro STOXX 50 down 0.7 pct
* Traders disappointed at lack of ECB stimulus
* Profit takers target outperformers among defensives
* 10 percent pullback eyed as buyers lack options - Monument
By Francesco Canepa
LONDON, April 4 (Reuters) - European shares fell sharply on Thursday as traders disappointed by a lack of fresh economic stimulus measures from the European Central Bank took profit on recent outperformers.
The ECB kept its interest rates on hold and failed to unveil new initiatives, such as special credit schemes for small enterprises, which some traders had been hoping for after recent weak economic data.
The pan-European FTSEurofirst 300 index extended losses after ECB President Mario Draghi spoke in the afternoon, to close 1.1 percent lower at 1,180.65 points. The euro zone Euro STOXX 50 index fell 0.7 percent to 2,621.43 points.
"He should show some recognition that things aren't good and he seems to be continuously wanting to pat himself on the back," Andy Ash, head of sales at Monument Securities, said.
Technology, industrial and consumer stocks , which all trade at valuation multiples higher than their 10-year average, were hit the hardest, shedding between 1.3 percent and 1.7 percent.
Traditionally defensive shares such as Anglo-Dutch consumer goods company and pharma group Roche, which had outperformed the market in the first quarter, fell 1.5-2.1 percent, leaving investors who seek shelter in more resilient stocks with few options.
"The real danger...(is) there's nothing to rotate into," added Ash, who was expecting a drop of up to 10 percent on major European indexes in the coming weeks.
Ash said he would wait for the pullback to run its course before buying back into equities, starting once again from the defensive sectors in light of grim economic conditions in Europe.
His views were mirrored by Robert Quinn, chief European Equity strategist at Standard & Poor's Capital IQ, who recommended stocks with resilient earnings in the context of a bearish market and poor economic data.
"You might get a bit of a selloff (on defensives) now but I think the (broader) market has probably got another period of weakness ahead of it," Quinn said.
"You stick with companies that have strong pricing powers and can meet their own forecasts."
A traditional example of such companies is dialysis specialist Fresenius Medical Care, which jumped 2.9 percent in volume nearly two and a half times the 90-day average after announcing a share buyback.