European shares edge higher, consolidate near highs

Tue Jan 29, 2013 9:42am GMT

* FTSEurofirst 300 up 0.1 pct, Euro STOXX 50 flat
    * William Hill helps travel and leisure sector
    * Major stock indexes near "overbought" territory

    By Atul Prakash
    LONDON, Jan 29 (Reuters) - European shares edged up to hover
near two-year highs on  Tuesday, with strong earnings reports
and a brightening economic outlook lifting sentiment, although
technical factors could limit gains in the near term.
    The STOXX Europe 600 Travel and Leisure sector was
among the top gainers, led by a 4.3 percent gain for William
Hill, Britain's largest bookmaker, after it posted
strong full-year results. The sector index rose 0.6 percent.
    At 0908 GMT, the FTSEurofirst 300 index was up 0.1
percent at 1,173.90 points after setting a 23-month high in the
previous session. The euro zone's blue-chip Euro STOXX 50
 index was flat at 2,744.98 points.
    "Its momentum is slowing a little bit after a good move, but
the overall uptrend remains intact. The Euro STOXX 50 is likely
to defend its current levels and might not move much in either
direction in the very near term," Commerzbank technical analyst
Petra von Kerssenbrock said.
    The index could face its next resistance at around 2,800
points, last tested in July 2011, she said, adding the
medium-term target was 3,050-3,080 and support was seen at
2,700, the level where a consolidation started after a rally in
January.
    The Euro STOXX 50 has surged 34 percent since a multi-month
low in June last year, while the FTSEurofirst index has gained
24 percent on liquidity support from central banks, an improving
global economic outlook and robust corporate earnings.
    Just 6 percent of companies on the STOXX Europe 600 index
 have so far reported fourth-quarter earnings, but 72
percent of them have met or beaten forecasts, according to Data
from Thomson Reuters StarMine.
    Market research group GfK said on Tuesday German consumer
morale rose for the first time in four months heading into
February as a lull in the euro zone storm boosted optimism.
    "The markets are currently overbought after one of the
longest winning streaks in years and we are due for a period of
consolidation. This will probably not be too violent as there is
a lot of money waiting at the sidelines," said Philippe Gijsels,
head of research at BNP Paribas Fortis Global Markets. 
   "Overall conditions remain favourable for a continuation of
the rally. Central banks will continue to inject money and the
world economy seems to be turning up." 
    The relative strength index (RSI) for the Euro STOXX 50 and
the FTSEurofirst was at around 68. A level above 70 is
considered as "overbought", which often results in a retreat for
stock indexes. An RSI below 30 is seen as "oversold".
    Among other sharp movers, banks fell 0.5 percent.
Royal Bank of Scotland, down 3.4 percent, led the sector
after the Wall Street Journal reported, citing people briefed on
the negotiations, that the bank was close to a 500 million
pounds ($785.32 million) settlement with U.S. and British
authorities over claims that some of its employees submitted
false Libor rates..
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