* FTSEurofirst 300 up 0.6 pct, post biggest weekly gain of 2012
* Euro STOXX 50 up 0.9, faces technical hurdle
* German data, optimism on Greek aid deal lift sentiment
* EDF up 4.6 pct in high volume after dividend announcement
By Francesco Canepa
LONDON, Nov 23 (Reuters) - European shares posted their best weekly gain so far this year after rising for a fifth day on Friday, boosted by strong German data and growing expectations Greece will soon get the next dose of financial help.
But key indexes failed to break out of their recent ranges, suggesting investors were reluctant to bet on a sustained rally and falls were likely in the coming days if a euro group meeting on Monday fails to yield an agreement on Greece or U.S. budget talks stall.
Germany's BASF and Bayer led a rally in chemical stocks on Friday after a German business morale index surprised with its first rise in seven months, raising the prospect that Europe's largest economy can regain some momentum.
The Ifo survey built on better-than-expected manufacturing data from Germany and its key export-market, China, helping the export-driven chemical sector end the week 5.7 percent higher, the best performer in Europe.
Investors also welcomed suggestions by the Greek government that the country's lenders were coming closer to an agreement on the next tranche of aid, sending euro zone banks and the euro higher in the afternoon.
"Market sentiment is positive (on a Greek deal) and if we don't get one it will be a problem, although I think the push we've seen in the last few days has more to do with the Far East," a trader in Milan said.
"I saw a few small buys from domestic funds on quality banks like Intesa Sanpaolo or underperformers like Banca Popolare di Milano, which is most interesting with a view to a rebound."
Popolare di Milano rose 1.1 percent and Intesa closed up 1 percent, with the former extending a bounce from a three-month trough hit on Wednesday.
They helped the pan-European FTSEurofirst 300 index close 0.6 percent higher at 1,110.45 points, taking its gains for the week to 4 percent.
Volume was light at 63 percent of its 90-day average as wall Street was scheduled to close early for Black Friday.
Among a handful of heavily traded stocks was French power group EDF, which rose 4.6 percent in volume three time its average after unveiling an interim cash dividend.
Nokia topped the FTSEurofirst 300, rising 9.3 percent after a media report said the Finnish handset maker was set to reach strong quarterly sales of its newly-launched smartphones.
Bottom of the table was Spanish travel technology company Amadeus, down 2.6 percent in twice its volume average, on news HSBC failed to find enough buyers in a placement of shares worth 400 million euros.
CHOPPY TRADING AHEAD
Charts on the Euro STOXX 50, up 0.9 percent at 2,557.03, showed the index lacked sufficient momentum to break above its September and October highs at 2,579 and 2,610, respectively.
This left the index exposed to a possible fall towards the lower end of its two month range in the 2,450 area.
"Only a push above 2,579/2,610 area would reinstate a bullish trend," Nicolas Suiffet, a technical analyst at Trading Central, said.
"As long as prices remain capped by the upper end of the trading range at 2,610, look for choppy price action with a bearish bias towards 2,500, the former neckline of a double bottom pattern, and 2,445, its 100-day simple moving average."
He added momentum indicators such as Bollinger bands, and the 20- and 50-day simple moving averages were also highlighting a lack of momentum.
Traders were seeking to take advantage of these market conditions by looking for bargains when indexes approached the low end of the range and locking profits at the top.
"People are buying into the recovery but with one eye still on Greece and the United States, so there hasn't been any high appetite for aggressive stocks, such as miners," Ed Woolfitt, head of trading at Galvan, said.
"Buy on the dips and sell on the spikes, trailing stops and good trends."
He expected future gains in mining stocks, which depend on demand from metal consumer China, to help Britain's FTSE 100 end the year above 6,000 points, compared to a close of 5,819 on Friday.