By Richard Hubbard
LONDON, Jan 28 (Reuters) - Rallies in European shares and
the single currency stalled on Monday after strong gains last
week as investors awaited confirmation that financial market
conditions and the outlook for the euro area have improved.
Investor sentiment rose strongly on Friday after data showed
European banks would repay more than expected of the emergency
loans they borrowed from the European Central Bank (ECB) and
that business sentiment in Germany was improving sharply.
A solid start to the corporate earnings season has also
helped send many equity indexes to pre-financial crisis highs,
with the Standard & Poor's 500 index closing last week at its
highest level in over five years.
In the equity markets Europe's FTSEurofirst 300 index shed 0.1 percent in early trade to 1,173.87 points,
levelling off near its highest level for almost two years,
though traders said there was still strong underlying demand.
'All European benchmarks are at their 2012-2013 highs. Every
time there's even a slight pull-back, the buying pressure comes
in,' Aurel BGC chartist Gerard Sagnier said.
The market's cautious mood on Monday also followed a weaker
session in Asia, where falls in technology companies saw the
MSCI's broadest index of Asia-Pacific shares outside Japan drop 0.4 percent.
The euro held near an 11-month high against the dollar
$1.3440 on Monday, and gold is languishing near
a two-week low as hopes for an economic recovery worldwide
dampen the metal's appeal as a safe haven.
Investors are keenly awaiting the ECB's monthly data on bank
lending to companies and consumers, due later, for confirmation
that growth is returning to the economy. Italy will also provide
a test of investor sentiment when it auctions almost 7 billion
euros ($9.4 billion) of 2-year and 5-year bonds.
However, the main focus for investors this week will be on
the U.S., where the Federal Reserve's Open Market Committee
meets on Tuesday and Wednesday, and where the nonfarm payrolls
report is due out on Friday.
Oil prices were being held in check by the events coming up
in the U.S., with Brent crude unchanged at $113.28 a
barrel, while U.S. crude rose 17 cents to $96.05 after
seven straight weekly gains - the longest such streak since
($1 = 0.7421 euros)
(Reporting by Richard Hubbard; Editing by Will Waterman)
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