PARIS | Thu Sep 8, 2011 3:09am EDT
PARIS Sep 8 (Reuters) - European stocks steadied on Thursday, halting the previous session's tentative rebound, as investors waited to see if the European Central Bank will signal a change in policy to support the ailing euro zone economy.
The market was also hesitant following Wednesday's low-volume technical bounce and ahead of U.S. President Barack Obama's speech to Congress during which he is expected to propose $300 billion in tax cuts and government spending as part of a job-creating package.
At 0708 GMT, the FTSEurofirst 300 index of top European shares was down 0.1 percent at 930.79 points, after gaining 3 percent on Wednesday, recovering from a 2-year closing low hit earlier in the week.
"We've reached extremely gloomy valuation levels on equities, with price-to-earnings ratios and dividend yields at levels not seen in the past 25 years, except during the 2008-2009 crisis," said Regis Begue, head of equities at Lazard Freres Gestion, which has 11 billion euros ($15.4 billion) under management.
"A bank like BNP Paribas trades at four times expected earnings for 2012, while in our worst-case scenario for next year, we get a price-to-earnings ratio of 7-8... At these levels, European stocks are pricing in the breakup of the euro zone." (Reporting by Blaise Robinson)
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