* European equity markets retreat from earlier highs
* FTSEurofirst 300 falls 0.3 pct, Euro STOXX 50 slips 0.1
* Investors express caution ahead of U.S data on Friday
* Miners fall as copper price weakens
* Spanish and Italian stock markets underperform
By Sudip Kar-Gupta
LONDON, March 6 European shares fell on
Wednesday as investors booked profits on a rally that had sent
several markets to multi-year highs, with weakness in the mining
sector after metals prices declined also weighing on equities.
Traders said European equity markets may be rangebound
towards the end of the week, ahead of key data that could
provide clues on the extent to which central banks will continue
with stimulus measures to support the global economy.
However, they added that the longer-term outlook for
equities remained positive, although markets may only rise at a
slow pace over the course of March and April.
The pan-European FTSEurofirst 300 index closed down
0.3 percent at 1,185.95 points, falling back after at one stage
rising by 0.4 percent to a 4-1/2 year intraday high of 1,193.35
The euro zone's blue-chip Euro STOXX 50 index
also retreated 0.1 percent to 2,679.89 points.
The Euro STOXX 50's decline pushed the index down close to
its 50-day simple moving average level of around 2,670 points,
and falling below that level could be taken as a sign to sell in
the near-term by traders who use technical analysis.
The FTSEurofirst 300 has risen 5 percent since the start of
2013, while the Euro STOXX 50 has risen some 2 percent.
Institutional investors said they would rather err on the
side of caution by selling out for a profit at current levels,
rather than add to equities at present given the risks of a
near-term minor pull-back.
"I've been booking some profits across the board but I've
been sitting on the fence this week," said Caroline Vincent,
European equities fund manager at Cavendish Asset Management.
Berkeley Futures associate director Richard Griffiths said
some traders were selling ahead of the publication of U.S.
non-farm payroll data on Friday, on expectations that those
figures would fail to beat market forecasts.
Griffiths said expectations of a strong U.S. non-farm
payroll number on Friday had already been factored into equity
markets, and that a number that failed to beat forecasts could
push down shares.
City Index strategist Joshua Raymond said equity markets
could be volatile ahead of the publication of such data.
"It's fairly choppy...there's a lot of data out over the
next couple of days that's going to be very important for the
near-term path of the market, whether stimulus buttons still
remain on, or whether there's more of a question mark on that,"
SPAIN AND ITALY UNDERPERFORM
A fall in the price of copper pushed down heavyweight mining
stocks, with the STOXX Europe 600 Basic Resources Index
- which includes mining companies - declining 1.4 percent to
make it Europe's worst-performing equity sector.
The so-called "peripheral" southern European stock markets
of Spain and Italy, which have been hit hard by the euro zone's
debt crisis and an election stalemate in Rome, also
underperformed with Spain's IBEX down 0.8 percent while
Italy's FTSE MIB fell 0.5 percent.
Rupert Baker, European equity sales executive at Mirabaud
Securities, said worries over Italy could temper gains on
European equities in the near-term, although he expected
European stock markets to grind slowly higher.
"My institutional clients, as far as I can see, have been
more tempted to sell into this market than buy, but March looks
OK," said Baker.
Central Markets senior broker Joe Neighbour said the fact
that European stock markets had earlier reached those fresh
peaks had been a cue for some to sell out at a profit to others
looking to catch up on that rally.
"With the psychology of people, when everybody hears that
the market is at new highs, the smarter money starts to shift
out and makes a profit by selling to people who are looking to
get in," said Neighbour.