European share prices were little changed in thin trading on Monday as U.S. markets remained closed for the Independence Day holiday, although lingering uncertainty over the results of stress tests conducted on European banks hurt financial stocks.
The volume on the FTSEurofirst 300 index of top European shares was just 15 percent of the index's 90-day average in the first three hours of trading.
At 1050 GMT the index was up 0.1 percent at 970.82 points after hovering in a range of 967.84-975.28. It closed 0.1 percent higher in the previous session but had its worst weekly performance since May 21.
Banks were among the top losers, with Barclays, Lloyds, Royal Bank of Scotland and Credit Agricole down 1.1 to 1.6 percent.
"There is a certain amount of scepticism that the stress tests (on banks) will do anything because it will be either fudged or the complete results won't be published. What we need is clarity," said Felicity Smith, fund manager at Bedlam Asset Management.
French Economy Minister Christine Lagarde said on Sunday the stress-test results, to be published on July 23, will show that "banks in Europe are solid and healthy".
But German magazine Der Spiegel said on Saturday European regulators were opposed to including a sovereign default scenario in the tests.
While some analysts have said the tests should restore confidence in the sector and lead to a recapitalisation of weaker banks, others have said the exact criteria of the sovereign stress scenario needs to be disclosed if the tests are to convince the market.
Haruyuki Toyama, head of Bank of Japan's financial markets department, said Europe has a long way to go in fixing its banking sector and it will take some time before market confidence is regained.
MACROECONOMIC FIGURES
Poor economic data also prompted investors to stay cautious.
Figures showed Britain's services sector expanded at its slowest rate for 10 months in June, while euro zone retail sales rose less than forecast in May
"There is a feeling that the second quarter this year will mark a temporary peak in the rate of economic growth," Smith said.
On Friday 50-day moving average of Wall Street's S&P 500 index broke below the 200-day moving average, a break known as the 'death cross' that points to more selling pressure ahead.
The next key support level for the euro zone blue-chip index Euro STOXX 50, which closed at 2,522.36 points on Friday, is 2,448.10, the index's lowest point in 2010, touched in late May. It was down 0.3 percent at 2,514.81 on Monday.
But some analysts were positive.
"Many of these markets now look technically oversold," said Mike Lenhoff, chief strategist at Brewin Dolphin.
"We have got the U.S. reporting season starting next week. If the news is good, and there is no reason why it shouldn't be, the equity markets are technically in a strong position now to have a rebound."
In Europe Some retailers were in demand on Monday. Carrefour , Marks & Spencer and Tesco rose 0.3 to 2.4 percent.
And oil major BP was up 2.4 percent after newspaper reports over the weekend said it was seeking a strategic investor to secure its independence in the face of any takeover attempts as it continues to battle the Gulf of Mexico blowout.
Across Europe, the FTSE 100 was down 0.1 percent, Germany's DAX was flat and France's CAC 40 fell 0.1 percent. The Thomson Reuters Peripheral Eurozone Countries Index fell 0.5 percent.
