PARIS, May 9 (Reuters) - European shares fell in early trade on Thursday, halting a sharp three-week rally to multi-year highs, with pharmaceutical stocks trimming recent lofty gains.
At 0706 GMT, the FTSEurofirst 300 index of top European shares was down 0.2 percent at 1,226.86 points, slipping from a near five-year high hit on Wednesday, while the euro zone's blue chip Euro STOXX 50 (Zurich: ^STOXX50E - news) index was down 0.6 percent at 2,768.81 points, retreating from a near two-year high.
Technical momentum indicators have been signalling that the two benchmark indexes were ripe for a retreat.
"We're seeing excessive optimism, with more and more retail investors turning bullish, which is never a good sign," said Guillaume Dumans, co-ahead of 2Bremans, a Paris-based research firm using behavioural finance to monitor investor sentiment.
"The signal we get from our indicator is contrarian, so we expect a pull-pack today."
Bucking the trend, Spanish oil group Repsol rose 1.5 percent, lifted by results showing a forecast-beating 47 percent jump in adjusted net profit.