European shares trade flat ahead of ECB
* FTSEurofirst 300 flat
* Miners boosted by BoJ easing
* Defensive stocks weaken
By Tricia Wright
LONDON, April 4 (Reuters) - European shares were flat on Thursday, pegged back by more weak economic data which compounded market concerns over global growth, with analysts anticipating further range bound trade in the near term.
The euro zone's economic malaise was illustrated by the publication of Eurozone Services PMI data showing continued contraction in the sector in March heaping more focus on the ECB, which concludes its April policy meeting later on Thursday.
Although economists polled by Reuters expect no change in interest rates, pressure is mounting on the central bank to take action to kick start the region's economy.
"In domestic Europe I think the macro data is a problem," Exane BNP Paribas's head of equity strategy, Ian Richards, said.
"I think unless we see a policy catalyst, or for some reason we see a restrengthening in that data trajectory... you get the sense that markets will be slightly more cautious."
The FTSEurofirst 300 was trading at 1,193.64 by 0850 GMT, after a 0.9 percent fall on Wednesday when weak U.S. data heightened concerns about the global economy's growth prospects.
The rally over the last nine months, supported by stimulus measures from central banks, has seen European shares re-rate on a price-to-earnings basis of 12.3 times, above the historical average of 12.19 times, Thomson Reuters Datastream data showed.
The Bank of Japan took surprisingly strong easing steps on Thursday, with traders saying the move was a boost for the embattled miners, which have lagged the broader index this year on concerns over demand.
The euro zone's blue-chip Euro STOXX 50, meanwhile, firmed 0.7 percent to 2,656.47, having fallen 1.5 percent on Wednesday.
Barclays Capital analyst Lynnden Branigan said the 'inside' session seen on Wednesday, where trade on the Euro STOXX 50 was within the prior day's range, highlighted indecision within the market, and he expected further rangebound trade near-term.
"A few more weeks of sideways chop before we get more bullish again," he said. Should the index break above the 2,750 area, the top of the recent range, Branigan targets the 2,790 area, the highs from mid-2011.
Defensive stocks, which have led the rally since the turn of the year in a sign that investors remain unconvinced over the global economic recovery, fell on Thursday, with their valuations now looking expensive too.
Healthcare, Food & Beverages and the technology sectors, which trade on 12-month forward price-to-earnings of between 18 and 20 times, according to Thomson Reuters data, were among the top fallers.
"With Europe experiencing a prolonged period of economic stagnation and negative real interest rates, the love affair of investors with the Heineken's and Unilever's of this world is understandable," Ad van Tiggelen, senior investment specialist at ING Investment Management, said.
"In a zero growth environment, any stock which combines (dividend) growth with a strong balance sheet, a global footprint and the ability to borrow money at ultra low yields, deserves a premium. The question is: how high should that premium be?"
(Reporting by Tricia Wright, additional reporting by David Brett and Blaise Robinson/editing by Chris Pizzey, London MPG Desk, +44 (0)207 542-4441)
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