* 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 markets.

"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 Societe Generale.

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, Galaxy S4.

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 BNP Paribas.

"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."