* FTSEurofirst 300 down 0.3 pct, retreats from 6-year high
* Germany's DAX hovers just below record high
* Portugal stocks sag; talk of capital hike hitting banks
By Blaise Robinson
PARIS, May 14 European shares paused on
Wednesday after a two-month rally that propelled a number of
indexes to multi-year peaks, as investors awaited confirmation
of more stimulus from the ECB before they chased the market
Portuguese stocks sank, with Lisbon's PSI 20
falling 1.8 percent. They were led lower by banking stocks after
a report said Millennium bcp was considering a capital
increase to speed up repayment to the state of its contingent
convertible bonds, or CoCos.
A spokesman for the bank, Portugal's largest private lender,
said on Wednesday it has made no decision about a possible
Shares in Millennium were down 4.8 percent. Banco Espirito
Santo lost 3.4 percent.
The PSI 20 had outperformed broad European indexes in the
first four months of the year, rising as much as 19 percent as
the Portuguese bond yields dropped and investor confidence in
the country improved.
But Portuguese stocks started to fall in mid-April, and the
PSI 20 hit a near three-month low on Wednesday.
"It's not the time to play indexes. The 'easy' rally is
over," said David Thebault, head of quantitative sales trading,
at Global Equities. "Investors have to do their homework now,
dig into balance sheets and pick the right stocks, not whole
At 1025 GMT, the FTSEurofirst 300 index of top
European shares was down 0.3 percent at 1,365.12 points, after
climbing to a six-year high in the previous session. Germany's
DAX dipped 0.1 percent, hovering below a record high it
reached in January.
Shares in Mediaset featured among the biggest
losers. They fell 7 percent after the Italian television company
posted a net loss in the first quarter.
Compass gained 5 percent after the world's biggest
catering firm said it would return 1 billion pounds ($1.68
billion) to shareholders through a special dividend.
European stocks had been lifted by expectations the European
Central Bank would take new steps to keep inflation from staying
too low. The FTSEurofirst 300 rose some 7 percent from lows in
Last Thursday, ECB President Mario Draghi said the central
bank was ready to take action in June to boost the euro zone
economy if updated forecasts merited it. On Wednesday, Reuters
reported the bank was preparing a package of policy steps for
the June meeting, ranging from rate cuts to measures intended to
boost lending to small and mid-size businesses.
"Optimism is very high amid traders that the ECB president
perhaps will not only do the talking during his next
meeting, but there is a strong possibility of some action,
especially now that he has German Bundesbank behind him," said
Naeem Aslam, chief market analyst at AvaTrade, in Dublin.
"The industrial production data released for the euro zone
has further cemented the argument that the region is in a
desperate need of further easing."
Data showed on Wednesday euro zone industrial output fell as
expected on the month in March and dropped unexpectedly
A number of traders said the recent rally could run out of
steam as investors look for an opportunity to cash in on that
rise. Peripheral euro zone markets, including Italy and
Portugal, are already seeing a round of profit taking this week
after outperforming since the start of the year.
"For me, it's overdone here, and there's a pullback coming,"
said Darren Courtney-Cook, head of trading at Central Markets
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(addintional reporting by Sudip Kar-Gupta in London and
Alexandre Boksenbaum-Granier in Paris; Editing by Larry King)