European shares nudged off highs by Veolia and Barclays

Tue Mar 3, 2015 8:02pm IST

* European stock markets fall but stay near multi-year highs

* DAX near record highs, FTSEurofirst near 7-yr high

* Veolia falls after Groupama sells stake

* Strong German retail sales support sentiment

By Sudip Kar-Gupta

LONDON, March 3 (Reuters) - European stock markets slipped off multi-year highs on Tuesday, pegged back by falls in the shares of French environment company Veolia and British bank Barclays.

Nevertheless, traders said the pullback was relatively minor given a strong run since the start of 2015, which has seen a major regional index rise 14 percent, and better-than-expected German retail sales data kept the German stock market near record highs.

Veolia Environnement fell 3 percent after insurer Groupama sold a 5.1 percent stake in the company.

Barclays also retreated 2.9 percent after setting aside an extra 750 million pounds ($1.15 billion) for potential fines arising from allegations of manipulation in the foreign exchange market.

By contrast, French steel pipe maker Vallourec outperformed to rise 6.1 percent after investment bank Macquarie said the company could be a bid target. Vallourec declined to comment.

Both Veolia and Barclays were among the worst-performers on the pan-European FTSEurofirst 300 index.

The FTSEurofirst 300 was down 0.3 percent at 1,556.75 points, but it remained close to seven-year highs and was still up around 14 percent since the start of 2015.

European stock markets have rallied since early January in anticipation of the European Central Bank's bond-buying programme, which is due to start this week and is expected to lower yields in the bond market, cutting borrowing costs for companies and driving money into equities.

Markus Huber, senior trader at Peregrine & Black, said he was taking a "little bit of profit", while ACIES Asset Management's Andreas Clenow was holding onto "long" positions betting on further gains.

"In the short-term, there could be a pullback, but I still see this as a bull market. My main, strategic positions are still 'long'," said Clenow.

BREAK-UP FEARS SHRUGGED OFF

The ECB's plans for new economic stimulus measures have helped ease concerns over debt-ridden Greece.

A survey showed on Tuesday that investors' expectations of the euro zone breaking apart had risen to their highest level in two years.

However, RBC Global Asset Management's chief economist Eric Lascelles said there were encouraging signs that the euro zone's economy was on the mend.

"The combination of low oil prices, low bond yields and a low euro unite to provide powerful economic stimulus. This theory is rapidly becoming a reality as euro zone economic surprises have veered from extremely negative to extremely positive in very short order," said Lascelles.

($1 = 0.6509 pounds)

Europe bourses in 2015: link.reuters.com/pap87v

Asset performance in 2015: link.reuters.com/gap87v

Today's European research round-up (Additional reporting by Francesco Canepa and Blaise Robinson; Editing by Andrew Heavens and Crispian Balmer)

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