European shares edged up on Monday after Italy finally formed a government, ending two months of political uncertainty, although analysts saw the gains petering out in the near term.
The FTSEurofirst 300 added 0.1 percent to 1,197.98 by 1052 GMT, having jumped 3.7 percent last week. That left it around 1 percent shy of its 2013 peak.
"We're slightly high and dry in terms of what drives the next leg," said Ian Williams, strategist at Peel Hunt.
"We've had the valuation expansion, and the earnings expansion is coming through a bit slower than we might have hoped for, so on that basis there is an argument for a consolidation phase."
Of the 34 percent of STOXX 600 companies that have posted quarterly earnings so far, only 46 percent have met or beaten earnings forecasts, Thomson Reuters StarMine data shows.
The euro zone's blue-chip Euro STOXX 50 rose 0.5 percent to 2,697.20. Technical analysts expect the index to stay within the roughly 200 point range it has traded in this year.
"When you're getting towards range highs I don't think it's a good prospect for higher equities in the near term," Lynnden Branigan, analyst at Barclays Capital, said. "My preference would be still to fade any upticks in stocks."
Milan's FTSE MIB outperformed the region on Monday, adding 1.5 percent after the Italian centre-left's Enrico Letta was sworn in as prime minister at the weekend.
While traders see scope for further gains in Italian equities, this was only on the basis that they have underperformed since an inconclusive election in February.
The MIB index is up 1.8 percent year-to-date, while the FTSEurofirst300 is 5.5 percent higher.
Italian shares are among the cheapest stocks in Europe, with the broad MSCI Italy index trading at 9.4 times expected earnings for the next 12 months, while the STOXX Europe 600 trades at 12.3 times expected earnings.
Miners fell as analysts issued bearish comment on the sector, which has suffered steep falls in recent weeks.
Credit Suisse is "underweight" commodity stocks and said that while the sector looks oversold, still it may not be due a recovery.
Signs of a slowdown in top metals consumer China has pressured copper and gold over the last month, and this in turn has impacted mining and commodity stocks.
Nomura, which has a weaker view on China, also maintained its cautious stance towards the metals and mining sector, but said it likes BHP Billiton and Rio Tinto.