By Sagarika Jaisinghani and Ambar Warrick
(Reuters) - European shares retreated from recent peaks on Monday as investors paused before launching into a week packed with economic data and the European Central Bank's first policy meeting of the year.
The pan-European STOXX 600 index <.STOXX> was down about 0.1%, after ending at a record high on Friday on optimism around U.S.-EU trade talks. Market activity was thin because of a holiday in the United States.
The benchmark European index has risen about 2% so far this month, as investors bet on a recovery in global growth amid cooling U.S.-China trade tensions.
"We are seeing a little bit of a pullback, having seen a very good run in markets since the start of the year," said Craig Erlam, senior market analyst at Oanda in London, adding that there was also some profit taking ahead of a "big week" consisting of U.S. corporate earnings and the World Economic Forum in Davos.
Markets will also be watching for the Purchasing Manager's Index (PMI) from the euro zone on Friday, with a recent Reuters poll showing that economists expect a slowdown in the bloc to have bottomed out in 2019.
Comments from ECB Chief Christine Lagarde at the central bank's first policy meeting for the year on Thursday will also be a point of interest. The bank is expected to keep the deposit rate unchanged after cutting it in September for the first time since 2016.
"We got a massive policy stimulus announced a few months ago, and it's going to take some time for that to filter through to the financial system. It's unlikely that the ECB is going to act in the aftermath of that so soon," Oanda's Erlam said.
For the day, the retail subindex <.SXRP> was the worst performing sector, with Switzerland's Dufry AG
Air France
German stocks <.GDAXI> bucked the trend, rising about 0.2% on strength in financials. Electronic payments service provider Wirecard AG
(Reporting by Sagarika Jaisinghani and Ambar Warrick in Bengaluru; Editing by Anil D'Silva and Nick Macfie)
