European shares were steady on Friday, hovering around five-year highs hit in the previous session, with the expiry of September derivatives contracts keeping trade brisk though choppy.
The surge in demand for riskier assets seen after the U.S. Federal Reserve's shock decision to postpone the withdrawal of monetary stimulus was fading, however, as investors took stock of their positions and locked in some gains.
"Investors are now worrying about the lack of potential positive catalysts going forward," said Guillaume Dumans, co-head of research firm 2Bremans. "If you add to that today's 'quadruple witching' derivative contract expiry, there's quite a bit of tension."
Investors are expected to have little appetite to roll over positions into October and November contracts.
Shares in Adidas were among the biggest losers across Europe, dropping 4.4 percent after the German sports apparel maker warned on its 2013 profit outlook.
Germany's No. 2 utility RWE AG also sank 3.5 percent after it slashed its dividend.
At 0930 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 0.04 percent at 1,265.47 points after hitting its highest level since mid-2008 in the previous session. It was on track for a third straight week of gains.
The euro zone's blue-chip Euro STOXX 50 index was down 0.1 percent at 2,934.11 points.
The Fed's quantitative easing programme has been a major factor behind the global equity market rally of the past year, which has propelled European shares to valuations versus future earnings not seen in nearly four years. That suggests the move higher has been more about excess capital in the financial markets than underlying company profit growth.
The STOXX Europe 600 index trades at 13 times 12-month forward earnings, a level not seen since November 2009, according to Thomson Reuters Datastream. The index also trades at 1.69 times book value, the highest price-to-book ratio since early 2011.
Data shows that analysts continue to cut earnings forecast for European companies, however, with the earnings momentum for the STOXX 600 companies at -1.6 percent.
"Current valuations, which are close to our end-of-year targets for the main European markets, argue for a selective approach to risk taking," Natixis strategists wrote.
They recommend focusing on the sectors which offer the best prospect for earnings growth, including the oil services, banking, auto, technology and media sectors.
"We are convinced that equity markets have entered a phase of resynchronisation with fundamentals. In this context, after exhausting the bulk of the normalisation potential for the risk premium, it becomes necessary to look at growth prospects."
Around Europe, UK's FTSE 100 index was up 0.03 percent, Germany's DAX index down 0.04 percent, and France's CAC 40 down 0.02 percent.
Despite concerns the market might have got ahead of itself, investment flow data shows brisk appetite for European stocks.
Flows into European equities from U.S.-based funds accelerated in the week ended Sept. 18 according to Lipper data, with the region's stocks enjoying their third-biggest weekly net inflows since Lipper started to track the data in 1992.
A Lipper poll of U.S.-based funds invested in European equities, which include exchange-traded funds' (ETFs) holdings, shows the funds added a net $968 million in the week, a 12th straight week of net inflows from U.S. investors.
The three biggest weekly inflows into European equities recorded by Lipper in the past 21 years have all happened in the past four months, with $1.17 billion of net inflows in the week ended June 12 and $1.08 billion in the week ended August 21.