LONDON, Jan 28 (Reuters) - European shares edged lower early on Monday as multi-month highs and recent bullish fund-flow data prompts some investment banks to turn more cautious on equities in the short-term.
By 0802 GMT, the FTSEurofirst 300 shed 0.94 points, or 0.1 percent, to 1,173.87, leveling off near two-year highs.
"Our global indicator now stands at +1.39 standard deviations, signaling the most bullish sentiment from equity mutual fund investors since January 2009," strategists at Nomura said in a note.
Equity funds outgained bond funds for the seventh straight week last week but the pace of inflows slowed, EPFR Global data shows.
"All of our proprietary regional mutual flow indicators, with the exception of Japan, are also at very bullish levels and along with elevated readings from another of our systematic sentiment indicators, the composite sentiment indicator has prompted our Global Quantitative Strategy Team to issue a short-term tactical neutral position on the market," Nomura said.
JP Morgan echoed that sentiment warning investors had become too bullish and that a consolidation could be on the cards, while downgrading its weighting in cyclical versus defensives.