* FTSEurofirst 300 flat
* ECB rate decision at 1145 GMT
* Miners bolstered by BoJ easing
* Defensive stocks weaken
By Tricia Wright
LONDON, April 4 (Reuters) - European shares were flat on Thursday, held back from a more bearish reaction to weak economic data by hopes of some reassurance from the European Central Bank later in the session.
The euro zone’s economic malaise was illustrated by the publication of euro zone 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.
The FTSEurofirst 300 was trading at 1,193.72 by 1030 GMT, after a 0.9 percent fall on Wednesday when weak U.S. data heightened concerns about the global economy’s growth prospects before Friday’s main U.S. jobs report.
“Macro data in Europe remains grim, and there’re now doubts about the strength of U.S. data ahead of tomorrow’s payrolls,” Saxo Banque senior sales trader Alexandre Baradez said.
“However, the market is not sinking because the poor data, combined with slowing inflation, means the ECB has a lot of room for manoeuvre to lower rates and find ways to boost credit in countries such as Italy and Spain.”
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, was up 0.9 percent at 2,663.07, having fallen 1.5 percent on Wednesday. Technical analysts expected further rangebound trade near-term.
“When the index eventually breaks out of the 200-point range we’ve seen since the start of the year, I expect it to make a run towards 3,000 if the breakout was to the upside or 2,400 if on the downside, which looks more plausible given the troubles in the euro zone,” Fawad Razaqzada, technical analysts at GFT Markets, said.
Stocks better suited to a low growth environment, which have led the rally since the turn of the year, 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.
Russell Investments highlighted that this outperformance by traditionally defensive stocks showed investors are becoming less bullish on European equities, paving the way to subdued market conditions in the coming months.
The Russell Developed Europe Defensive Index, comprised of shares less sensitive to the economic and credit cycles and to market volatility, returned 8.9 percent in the first quarter.
This compared to returns of 3 percent for its more cyclical counterpart, the Russell Developed Europe Dynamic Index, and 6 percent for the broader Russell Developed Europe Index.
“The significant divergence in first quarter performance between the defensive and dynamic indexes is a source of concern to us,” Wouter Sturkenboom, investment strategist at Russell Investments Europe, said in a note.
“For the immediate future, unless we see a major change in fundamentals, we believe it will continue to be a cautious market and one that may favour individual security selection and a multi-asset approach.”