European shares edge lower after recent highs

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Sept. 10, 2012, 10:26 a.m. | World — by Reuters

European shares trimmed the previous session's gains early on Monday, as investors went in to consolidation mode awaiting catalysts.
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LONDON, U.K. - European shares trimmed the previous session's gains early on Monday, as investors went in to consolidation mode awaiting catalysts such as potential stimulus from the U.S. and a German constitutional ruling on the European Stability Mechanism.

By 0704 GMT, the FTSEurofirst 300 was down 1.91 points, or 0.2 percent at 1,104.81, having hit a fresh 13-month intraday high on Friday on enthusiasm over the European Central Bank's bond-buying plan.

"Our medium term view is still bullish for equity markets but in the short-term we see some consolidation as we await the ESM court decision in Germany, the outcome of elections in Holland and the FOMC meeting in the U.S.," said Achim Matzke, European stock indexes analyst at Commerzbank.

Investors will focus on a number of events expected in Europe during the week, including Germany's constitutional court ruling on the legality of the euro zone's permanent financial rescue fund.

Meanwhile, the Fed at its meeting on Thursday looks set to launch a third round of bond purchases to try to drive borrowing costs lower and revive economic growth.

"If we get larger than expected QE from the U.S. then it is good for the equity markets and risk assets, but if it is not large enough then momentum in equities could run out of steam," Commerzbank's Matzke said.

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