European shares slip off high, Richemont retreats

London - European shares slipped off three-week highs on Friday, with luxury goods group Richemont falling on weak sales, while a rebound in the euro also pegged back the region's stock markets.

The pan-European FTSEurofirst 300 index, which had reached a three-week high on Thursday, was down by 0.3% at 1 613.84 points by the middle of the trading session.

European equities have rallied this year on the back of a government bond buying programme and record low interest rates from the European Central Bank (ECB). These have hit returns on cash and bonds and driven investors over to the better returns on offer from the stock market.

This has also pushed down the euro on currency markets, benefiting European exporters, but a recent batch of weak US economic data has caused the euro to rebound slightly against the US dollar.

The euro hit a session high against the dollar on Friday, with ECB President Mario Draghi reiterating his call for euro zone countries to reform their economies, warning that future growth would remain modest.

"Some of the US data has put dollar weakness and the euro's strength back into play," said Logic Investments' Harry Shann.

Shann said he would look to sell into any rallies on European stock markets given this context.

"We are looking to sell into strength at the moment, coming into the summer months."

Richemont falls

Germany's DAX, which hit a record high of 12 390.75 points in April, fell 0.5% to 11 807.31 points, while France's CAC also declined by 0.4%.

Germany's Deutsche Bank, media group ProSiebenSat.1 and Deutsche Telekom all fell as their shares traded without the attraction of their latest dividend payouts.

Deutsche Bank came under further pressure after only 61% of shareholders at the meeting voted in favour of the 2014 performance of the bank's board members Anshu Jain and Juergen Fitschen in a non-binding vote.

Richemont [JSE:CFR] also underperformed, falling 1.4%, after reporting weak sales and warning that trading remained tough in its key Hong Kong and Macau markets.

However, mobile network operator Vodafone rose 4.5% on upgrades from Citigroup and Deutsche Bank, with both citing comments earlier in the week from Liberty Global chairman John Malone that Vodafone would be a "great fit".

Greece's ATG share index also held firm after a government spokesperson said Greece expected to reach a cash-for-reforms deal with its creditors in the next 10 days and aimed to meet all its payments in June.

Stock market dealers warned trading volumes were expected to be thin, given public holidays in Britain and the United States on Monday.

"Overall sentiment remains positive, however trading volume is expected to be moderate at best with many markets closed for trading on Monday," said Markus Huber, senior analyst at Peregrine & Black.