Debt fears halt European stocks' winning run

PARIS (Reuters): European stocks dipped early on Monday in choppy trade and halted a four-session rally, dragged down by brewing concerns over Spain's finances.

At 0819 GMT, the FTSEurofirst 300 index of top European shares was down 0.1 percent at 1,050.80 points, after making early gains.

Losses were limited by gains in sectors seen as defensives. Pharma stocks Astrazeneca and GlaxoSmithKline were up 1 percent and 0.7 percent respectively, while France Telecom rose 0.5 percent.

The euro zone debt crisis was back at the front of investors' minds after data showed Spain's GDP shrank 0.3 percent in January to March on a quarterly basis, beating economists' forecasts but still showing the country slipping into recession.

"Coming on top of record unemployment data last week as well as massive demonstrations against austerity on the streets yesterday, the problems for European leaders continue to mount up," Michael Hewson, senior market analyst at CMC Markets, said.

"Given continued rises in unemployment and a crashing economy, Spanish ministers may be faced with no other choice but to accept some form of bailout whether they like it or not."

Spain's IBEX lost 0.2 percent in morning trade, down 16.2 percent so far in 2012, strongly underperforming the euro zone's blue chip Euro STOXX 50 index, up 1.2 percent year-to-date, and Germany's DAX, up 15.9 percent.

"The relative fall of the Spanish index can be partially attributed to fears of another property market crash, with construction companies collapsing since January," Societe Generale strategists wrote in a note.

On Sunday, thousands of people protested across Spain against spending cuts aimed at reducing the budget deficit and fixing the economy, crippled by unemployment close to 25 percent.

Around Europe, UK's FTSE 100 index was down 0.2 percent, France's CAC 40 down 0.4 percent, while Germany's DAX index was up 0.2 percent.

The STOXX 50 index was down 0.4 percent at 2,333.59 points, retreating after running into strong resistance on its 200-day moving average, at 2,348.58 points.

Charts also show the broad FTSEurofirst 300 index hitting resistance on the 38.2 percent Fibonacci retracement of the index'