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PARIS, Jan 21 (Reuters) - European shares rose on Monday, climbing back towards near two-year highs, as investors bought back into relatively 'undervalued' sectors such as utilities and mining.
Gains were limited, however, as worrying comments from Swiss watch maker Richemont about sales growth in China sparked a sell-off in luxury stocks, with Richemont losing 5.6 percent and Louis Vuitton owner LVMH falling 1.3 percent.
The FTSEurofirst 300 index of top European shares provisionally ended 0.2 percent higher at 1,166.26 points, just a few points shy of a near two-year high of 1,170.29 hit on Jan. 10.
Shares of utilities and basic resources companies - which were among the worst performers in Europe in 2012 - led the gainers on Monday, with ArcelorMittal surging 4 percent and E.ON climbing 1.6 percent.
"Investors are switching to the 'value' stocks, they're looking for the cheapest valuations. If things finally improve on the macro side in Europe, these are the stocks that could outperform, after years of underperformance," a Paris-based trader said.
Trading volume was low in Europe on Monday as Wall Street was closed due to Martin Luther King Jr. Day.