European share prices slipped on Monday to snap a four-day winning streak and after stocks hit an eight-month high last week, with traders and fund managers reporting some rotation out of top-performing sectors such as carmakers into cheaper prospects such as telecoms.
A standout loser was Porsche, down a further 2 percent following falls on Friday when Bernstein downgraded the stock to "underperform" after its recent out-performance. Cable & Wireless World-wide topped the gainers list up 4.2 percent as investors switched into the sector and ahead of the 29 March deadline set by the UK Take-over Panel for Vodafone and Tata Communications to decide if they want to bid for the firm. Traders also said that investors were putting their money into telecoms due to their dividend attractions.
"Auto sales have had a steady climb over the last few months and seem to have run their course for the short term. We have seen some rotation into telecoms which offer a progressive dividend yield," Atif Latif, director of equities and derivatives at Guardian Stockbrokers, said. "We have a modest pro-cyclical stance in luxury goods, industrials, but we are looking to rotate out of food and beverage stocks as valuations look stretched," Ian King, head of international equities at Legal & General, said.
The pan-European FTSEurofirst 300 index of top shares closed down 0.1 percent at 1,105.61 points in a choppy session, having been up as much as 1,107.57 and down as low as 1,100.76. The index remained under a key resistance level at 1,113.73 points - the level it reached in July 2011 before it slumped to a September low. Last week's rally saw it near this level and traders said if the index continued to struggle to get past this then it could back down to the level it was before the European Central Bank started its latest round of LTRO cheap lending to banks.
"A failure here would bring back negative sentiment and more selling down to 990 points," Latif said. Losses in Europe were also limited by merger and acquisition activity. Trading was heavy in Dutch courier firm TNT, up 1.1 percent after United Parcel Service said it had agreed a 5.2 billion-euro ($6.85 billion) take-over.