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Paris - European shares paused on Thursday after a sharp five-day rally as investors waited to see the size and shape of a bond-buying programme the European Central Bank (ECB) is expected to unveil later.
Euro zone banks have been among the top gainers ahead of today's ECB meeting, with Societe Generale, UniCredit and Mediobanca all up about 11% in the past week, and ING up 8.2%.
Market expectations are sky-high for the ECB to announce large-scale government bond purchases with new money, or quantitative easing although its exact size and duration are still unclear.
"QE itself is in the market except its size and how long it will last," said Markus Huber, a senior trader at Peregrine & Black. "Anything less than €500bn would be definitely a disappointment (and) if it's just a year, that's also already in the market."
At 13:20, the FTSEurofirst 300 index of pan-European shares was down 0.04% at 1 430.55 points, hovering just below a seven-year high hit earlier in the session.
The benchmark index has risen nearly 6% in the past five sessions, strongly outpacing US equity markets.
European stocks still trade at relative multi-year lows versus US shares, and many analysts expect the gap to start closing as investment flows return to Europe.
While Wall Street's benchmarks recently hit record highs, the eurozone's blue-chip Euro STOXX 50 still needs to rally by about 40% to reach 2007 peaks.
In terms of relative price performance, eurozone stocks trade at a 50-year lows versus US stocks, according to Bank of America-Merrill Lynch.
European stocks also look cheap with earnings factored in, trading at the lowest price-to-earnings ratio to the US market in two-and-a-half years, Thomson Reuters Datastream figures show.
Giant fund manager Pimco, which has $1.68trn in assets under management, said on Tuesday it has placed an 'overweight' position on global equities, particularly European stocks.
Britain's FTSE 100 index was up 0.3% on Thursday, Germany's DAX was down 0.2% and France's CAC 40 was 0.1% lower.
Greek banks rose 1.3% after a banking source told Reuters late on Wednesday the ECB had approved an emergency funding line for Greek banks to be provided via the national central bank.
Logitech surged 10.3% as the Swiss maker of computer peripherals said it was raising its guidance for full-year operating income.
