LONDON Jan 29 (Reuters) - European shares edged higher to trade near two-year highs on Tuesday, with improving macroeconomic conditions and strong earnings improving sentiment, although technical factors could limit gains in the near term.
At 0811 GMT, the FTSEurofirst 300 index was 0.2 percent higher at 1,174.78 points after hitting a 23-month high in the previous session. The euro zone's blue-chip Euro STOXX 50 index was 0.1 percent higher at 2,745.62 points.
"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," Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, said.
"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 STOXX Europe 600 Travel and Leisure sector was the top sectoral gainer early on, led by a 3.2 percent gain for William Hill, Britain's largest bookmaker, after it posted strong full-year results.