LONDON: fell for a second day on Friday, after reaching two-year highs this week, as investors grew nervous that the US Federal Reserve will start to withdraw stimulus next month.
Several traders, however, said they remained confident on prospects for European equities on a longer-term basis, reinforced by data this week showing the euro zone had pulled out of recession.
They expect the market will rebound after a possible pull-back in September if expectations that the Fed will start trimming its stimulus programme - which has helped drive this year's stock rally mount.
The pan-European FTSEurofirst 300 index, which fell 1 percent on Thursday in its biggest one-day drop in six weeks, was down 0.2 percent at 1,225.11 points in mid-session trade.
The STOXX Europe 600 index slipped 0.1 percent to 305.01 points and the euro zone's blue-chip Euro STOXX 50 index which hit a two-year high this week at 2,855.89 points - was flat at 2,836.19 points.
Global equity markets have slipped over the last month on the view that the US economy might be strong enough for the Fed to start scaling back its stimulus programme.
Michel Juvet, chief investment officer at Swiss bank Bordier, said that while he felt the U.S stock market was set for a pullback, he remained more confident over the prospects for European equities.
Key European indexes have risen less than the US Dow Jones Industrial and S&P 500 indexes. The Dow Jones and S&P have risen 15-17 percent since the start of 2013, while the FTSEurofirst 300 and Euro STOXX 50 have risen 8 percent.
Juvet said that even if the Federal Reserve tapers its economic stimulus as the U.S economy continues to strengthen, the European Central Bank (ECB) would maintain loose monetary policies to help the euro zone economy.
"In the US, we have all the signs that the market has overheated. But for me, Europe is different. There is no ECB tapering in view," he said.
Andreas Clenow, hedge fund trader and principal of ACIES Asset Management, sees a broader upwards trend for European shares supported by signs of an economic recovery in Europe.
Flows into European equities from US-based funds hit a two-month high in the week ended Aug. 14, data from Thomson Reuters Lipper service showed, signalling steady investor appetite for the region's stocks.
"The Euro STOXX 50 hit a high two days ago. After that, any negative factor will be blown out of proportion. We're probably overdue for a minor correction but we're still in a bull market," Clenow said.
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