* Portugal's PSI-20 market falls more than 2 pct
* FTSEurofirst 300 down 0.3 pct
* Take more defensive approach -Sunrise Brokers strategist
By Sudip Kar-Gupta
LONDON, May 16 European stock markets fell on
Friday, retreating further from multi-year highs reached earlier
in the week, as the Portuguese market underperformed for a
second day on concerns over its economy.
The pan-European FTSEurofirst 300 index was down by
0.3 percent at 1,353.78 points in mid-session trading, falling
back from 6-year highs reached on Thursday, while the euro
zone's Euro STOXX 50 index fell 0.5 percent.
Germany's DAX, which hit a record high of 9,810.29
points on Thursday, fell 0.7 percent to 9,586.59 points while
Portugal's smaller PSI-20 index underperformed with a
2.4 percent drop.
Traders said the Lisbon market was impacted by a 10 percent
drop in Portuguese bank Banco Espirito Santo after BES
announced a discounted share issue to raise capital.
They added that ongoing concerns over the state of
Portugal's economy, after data on Thursday showed a shock 0.7
percent drop in gross domestic product (GDP), was further
weighing on the market, while Portuguese bonds also
fell on Friday.
"We think there is always another euro zone crisis just
around the corner," said HED Capital head Richard Edwards.
TIME TO GO DEFENSIVE?
Some traders were confident that the broader, upwards
trajectory of European stock markets remained intact.
The FTSEurofirst 300 remains up by nearly 3 percent since
the start of 2014, in spite of Thursday's pullback which was
triggered by data that showed a surprise contraction in the
economies of Portugal and Italy.
Merger activity has also supported European stock markets
this year, and French telecoms shares such as Iliad and
those of conglomerate Bouygues - which owns Bouygues
Telecom - rose on Friday on new signs of takeover activity in
Andreas Clenow, hedge fund trader and principal at ACIES
Asset Management, was unconcerned by Thursday's stock market
sell-off and was sticking with "long" positions betting on more
gradual gains for European equities.
"So far, I don't see enough damage to the uptrend," said
However, Sunrise Brokers equity strategist Christopher
backed a more defensive approach to the equity markets and
favoured utility stocks - often preferred for their solid
dividend yields - for protection in case of any more prolonged
stock market declines.
"We are advocating a more defensive bias," he said.
(additional reporting by Lionel Laurent; Editing by Toby