European stock markets slipped from multi-year highs on Tuesday, pegged back by falls in French environment company Veolia and British bank Barclays. Traders said the pullback was relatively minor, given a strong run since the start of 2015 that has seen a major regional index rise 13 percent. Better-than-expected German retail sales data also kept the German stock market near record highs.
Veolia fell 3 percent after insurer Groupama sold a 5.1 percent stake in the company. Barclays also retreated 3.2 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. A Goldman Sachs rating cut sent the shares of telecoms group Numericable down 4.3 percent. Steel pipe maker Vallourec rose 4 percent after investment bank Macquarie said the company could be a bid target. Vallourec declined to comment.
Veolia, Numericable and Barclays were among the worst-performers on the pan-European FTSEurofirst 300 index. The FTSEurofirst 300 ended down 1 percent at 1,545.35 points but remained close to seven-year highs of 1,567.68 points reached earlier this week and was still up around 13 percent since the start of 2015.
European stock markets have rallied in anticipation of the European Central Bank's bond-buying programme, which is due to start this week and should 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. 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.
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