* FTSEurofirst 300 dips 0.4 percent, off 4-1/2 yr peak
* March put options expiry leaves mkt exposed
* FTSE World reshuffle boosts volumes
By Toni Vorobyova
LONDON, March 15 (Reuters) - European shares retreated from
more than four-year peaks on Friday as weak U.S. data prompted
investors to lock in profits for the weekend and the March
options expiry left the market less protected against a fall.
U.S. consumer sentiment fell to its lowest in over a year,
while inflation picked up, the data showed, casting doubts over
the strength of the world's biggest economy and at odds with
recent upbeat U.S. releases, which had boosted global share
"What's dragging on it today? May be the U.S. data, the
weaker consumer confidence," said James Butterfill, global
equity strategist at Coutts.
Still, he did not rule out the possibility of more gains in
the near term, which could keep European stocks on track for a
10th month of gains in March.
"(Central bank stimulus) in the U.S. and Japan is quite a
back-stop in terms of any significant downside but, saying that,
we are cautious on most equity markets at the moment ... If you
are concerned that markets are looking quite toppy then you
could look more for dividend plays. What we are doing in
portfolios is not adding to positions."
The FTSEurofirst 300 closed down 0.4 percent at 1,203.01
points, retreating from a fresh 4-1/2-year high of 1,209.05
points set at the start of the session.
The EuroSTOXX 50 fell 0.7 percent, with the move accentuated
by the options expiry.
Around 3.4 million put contracts - the right to sell the
euro zone blue chip index - expired on the Eurex exchange on
Friday, compared to just 1.8 million upside call bets.
Without the protection of puts, investors may be less
willing to sit through any market weakness, preferring instead
to sell at the first whiff of a correction and, thus,
exacerbating any downside moves.
Activity around the expiry bolstered market volumes, as did
investors preparing for a rejig in the FTSE World index series,
which came into effect after Friday's close.
The review, designed to make the indexes more closely
reflect the constituents' free floats, could spark investment
flows of $12 billion globally, as tracker funds and other
investors adjust their portfolios, according to estimates from
Volumes on EuroSTOXX 50 were double their 90-day daily
average due to the index reshuffle and the options expiry,
making it the most active session since Feb. 26, when European
equity markets sold off sharply in the wake of a stalemate
Italian election result.
Among individual stocks, Nokia was one of the
worst performers, down 3.7 percent after South Korean Samsung
Electronics Co premiered its latest flagship phone,
Corporate earnings also remained a drag, with Swiss luxury
chocolate maker Lindt & Spruengli and budget fashion
retailer Hennes & Mauritz shedding 2.1 percent and 1.0
percent, respectively, after results.
Around 40 percent of European companies that have reported
earnings so far have undershot full year forecasts, according to
Thomson Reuters Starmine data. That, coupled with a still weak
domestic economy, has prompted some analysts and investors to
wonder whether the market's gains have been overdone.
"We are not bullish on Europe, not at current levels," said
Gerry Fowler, global head of equity and derivatives strategy at
"Now it's back to economics and fundamentals, which aren't
necessarily supportive of further gains in European equities,
especially with political uncertainty. So it's going to be a bit
of a wait-and-see."