European shares decline

Heightened concern about economic growth in the eurozone and China weighed on cyclical stocks on Monday, pushing European shares lower at the close on Monday. But strategists and technical analysts said the underlying momentum was still bullish and the recent rally could see another leg in the coming weeks.
Basic resources stocks were the top fallers, shedding 3.5 percent after China, the world's largest consumer of raw materials, cut its annual growth target to an eight-year low. Kazakh-focused miner Kazakhmys was among the worst hit, shedding 4.9 percent in volume double the 200-day average as the group was downgraded by HSBC and Bank of America Merrill Lynch.
Data showing the euro zone was unlikely to avoid a recession this year also cooled sentiment. The region's Euro Stoxx 50 ended the day 0.6 percent lower at 2,529.86, pushed down by sectors that depend on economic growth, such as banks, insurers, commodity and oil stocks. Steel giant Arcelor Mittal was the top faller, dropping 3.8 percent, with Spanish oil major Repsol and German lender Deutsche Bank down 2.3 percent and 2 percent, respectively.
The euro zone gauge extended losses in late trade after Greece warned it was ready to enforce losses on its private sector creditors. This fuelled speculation that an insufficient number of bondholders had voluntarily taken up Athens' debt swap offer, despite earlier reassurances by key lenders that they would accept the offer. "It's quite a big question over whether or not there has been sufficient take-up," Neil Marsh, a strategist at NewEdge, said.
Marsh, however, said the market was unlikely to sell off unless the was a concrete development pointing to a messy default of Greece and he maintained investor sentiment remained bullish, adding good non-farm payroll data from the United States on Friday would likely trigger a new rally.
"(But) the long-term momentum indicator is still oriented up." The French broker added the index was still supported by its 50-day average, which represented "a good entry level" for a long trade within the 2,425-2,435 window. The broader FTSEurofirst 300 index ended the day down 0.6 percent, closing at 1080.64 points. HSBC's strategists also argued the recent rally could see a final up-leg, driven by retail investors who had missed on the gains, although the bank still expected the FTSEurofirst 300 index to retreat to 990 points by the end of the year. HSBC's investor sentiment index hit a 12-month high in February, a level "at which markets often - albeit with a lag - enter into a correction", the bank said in a note, highlighting similar moves in 2006 and late 2010.
The bank's strategists deemed a shift back into equities "quite likely" in the coming weeks, although they cautioned this could spur some earlier entrants to take profit. They had a "neutral" stance on European equities, which accounted for a quarter of their portfolio's total weight, with an "underweight" positions on the euro zone and an "overweight" on Switzerland and Russia. This was reflected by a 2,220 points year-end target for the Euro zone Stoxx 50 index and a 6,200 target for the Swiss Market Index, which outperformed major European indexes on Monday by closing 0.1 percent higher at 6,153.91.