* FTSEurofirst 300 down 0.6 pct, still near 6-1/2 year high
* Stock markets slip after weak German economic data
* Total, Sanofi fall after cautioning over results
By Sudip Kar-Gupta
LONDON, July 7 European stock markets retreated
on Monday after weak German economic data took the wind out of a
rally that had pushed a leading regional index back near 6-1/2
Some analysts said the market could flatline in the near
term although the longer-term outlook remained positive given
the recent steps taken by the European Central Bank to boost the
The pan-European FTSEurofirst 300 index, which hit
a 6-1/2 year high of 1,399.62 points in June, was down by 0.6
percent at 1,385.62 points going into the close of the trading
The euro zone's blue-chip Euro STOXX 50 index
fell 0.7 percent to 3,247.57 points, while Germany's DAX
- which hit a record high in June - weakened by 0.5 percent to
European stock markets fell after German industrial output
declined by 1.8 percent on the month in May, its biggest drop in
more than two years, confounding expectations of unchanged
industrial output in Europe's powerhouse.
Central Markets' trading analyst Joe Neighbour expected that
the weak data would contribute to the DAX staying below the
10,000 point level in the next few weeks.
James Butterfill, global equity strategist at Coutts, added
that the German data showed that Europe's gradual economic
recovery remained a patchy one.
"It rings alarm bells across Europe that the recovery is not
a straight line upwards," said Butterfill.
TOTAL AND SANOFI SLIP
A fall in the shares of heavyweight stocks Total
and Sanofi also pegged back European markets.
French oil major Total fell 1.4 percent after it said its
margins would be affected by a weak performance of its refining
business. French pharmaceuticals group Sanofi slipped 0.4
percent after it said adverse foreign exchange movements would
affect its earnings.
But in spite of the pullback in equities, many traders
expected European stocks to rally later this year, helped by the
ECB's support for the euro zone economy, including last month's
interest rate cut and ECB head Mario Draghi's plans to keep open
the option of creating money, if needed.
"The near-term still looks positive. Mario Draghi's speech
last week is still keeping a risk-on scenario," said Carlo
Alberto de Casa, senior market analyst at online brokerage
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Additional reporting by Alistair Smout)