(Reuters) - European shares pulled back from three-month highs on Monday, with losses in technology and healthcare stocks halting a recent rally on hopes of a post-coronavirus economic recovery.
The pan-European STOXX 600 closed 0.3% lower, as investors moved out of sectors that remained resilient during the coronavirus-led sell-off earlier this year, while bidding up laggards such as banks .SX7P and oil and gas .SXEP firms.
Europe’s healthcare index .SXDP dropped 0.6%, with AstraZeneca (AZN.L) sliding 2.7% after Bloomberg reported it had approached U.S. rival Gilead Sciences (GILD.O) about a possible merger to form one the world’s largest drug companies.
Tech stocks .SX8P were led lower by chipmakers ASML (ASML.AS), ASM International (ASMI.AS) and STMicroelectronics (STM.PA), which fell more than 4%. Europe’s tech index is just 4.5% below its all-time high.
Meanwhile, euro zone banks .SX7E jumped 2%, helping lender-heavy bourses in Spain .IBEX and Italy .FTMIB outperform, supported by a bigger-than-expected pandemic-related stimulus by the European Central Bank last week.
“We find the year-to-date underperformance of the European banks, and the ECB actions, have created a compelling trading opportunity to buy,” KBW analysts wrote in a client note.
Euro zone stocks .STOXXE have rallied 39% from March lows, while the broader European index has climbed about 33% as countries reopened from weeks-long lockdowns, while improving economic data and fresh stimulus raised hopes the worst is over.
“We see scope for further upside if economic normalization continues, governments in major economies do not need to reimpose lockdowns, and central bank policy remains loose,” noted Mark Haefele, chief investment officer of Global Wealth Management at UBS.
“But the rally does increase the importance of selectivity within the market.
BP also got a boost as Reuters reported it would cut about 15% of its workforce in response to the coronavirus crisis.
German card payments company Wirecard (WDIG.DE) dropped 1.7% after prosecutors opened proceedings against its entire management board as part of a market manipulation probe.
Reporting by Sruthi Shankar in Bengaluru; Editing by Bernard Orr and Mark Potter