European stocks dip after Macron relief rally, CAC briefly hits highest since 2008

European shares dipped after a relief rally on the widely anticipated victory of pro-business candidate Emmanuel Macron in the French presidential election.

While investors welcomed Macron's win, they said his ability to deliver reforms depended on securing a strong enough majority in parliament in legislative elections in June.

The pan-European STOXX 600 index was down 0.2 percent, while France's CAC fell 0.9 percent after hitting its highest levels for more than 9 years. Germany's DAX dipped 0.2 percent after touching a new all-time high.

Macron defeated the National Front's Marine Le Pen, who had threatened to take France out of the European Union.

"The market had already strongly rallied into this election," JP Morgan global market strategist Emmanuel Cau said.

"We've cut a little bit of risk, specifically in the capital goods and chemicals sectors," he said.

Banks, which are more sensitive than other sectors to political factors, also turned negative, with the euro zone banks index falling 0.8 percent having hit its highest since November 2015.

BNP Paribas and Societe General fell 1 percent and 2.4 percent respectively.

Some market participants had speculated that a Macron win could be the last piece of the puzzle for the European Central Bank to begin rolling back from its ultra-loose monetary policies. Banks have been penalised by ultra-low interest rates and possible tightening measures by the ECB could help ease off pressure on their margins.

In France, mid- and small caps fell 0.2 percent, less than the drop seen in the more internationally exposed blue-chip index. SYZ Asset Management analysts expect companies with domestic exposure to be favoured by Macron's plans.

Among French blue chips they see carmakers Renault and Peugeot benefitting from greater job market flexibility and from incentives to buy less polluting cars, while construction firms Vinci, Eiffage and Saint Gobain look to be in line for a boost from plans to modernise infrastructure.

However, shares in Renault, Peugeot, Vinci and Saint Gobain were all lower, tracking the broader losses, while Eiffage added 0.3 percent.

Investors remained broadly upbeat about prospects for European equities, which have started to outperform U.S. and British peers on the back of one of the strongest earnings seasons in many years and robust macroeconomic data.

JP Morgan's Cau said the French election result could still boost investment in European stocks and make the region more attractive in the medium term.

On Monday, a survey showed that investor sentiment in the euro zone hit its highest level for almost a decade in May, improving more than expected thanks to a strong assessment of the economic situation and expectations that political uncertainty will diminish.

There were also some earnings updates to drive price action on Monday, some of which fell short of market expectations.

PostNL fell 6 percent after revenue growth at the Dutch postal firm missed expectations in the first quarter, while a weak first-quarter and a broker downgrade sent Italian luxury goods makers Tod's down 10 percent.

The picture for earnings however remained strong. According to Thomson Reuters data about half of European companies have reported results with 72 percent beating expectations and 7 percent meeting them. First quarter earnings growth is seen at a healthy 17.6 percent.

Shares in Akzo Nobel fell 2.4 percent after the Dutch paint maker rejected a third takeover proposal from larger U.S. rival PPG Industries. It said the 26.9-billion-euro proposal undervalued the company, faced antitrust risks and does not address other concerns such as "cultural differences".

(This article has not been edited by DNA's editorial team and is auto-generated from an agency feed.)