* FTSEurofirst closes up 0.3 pct at new 2013 closing high
* Euro STOXX 50 rises 0.5 pct
* Nokia falls 5.5 pct after company axes dividend
* Strong German data buoys DAX, overall sentiment
By Sudip Kar-Gupta
LONDON, Jan 24 European shares hit their 2013
peak on Thursday as signs of growth in economic powerhouse
Germany strengthened expectations that the region's sovereign
debt crisis may be easing.
Some strategists have forecast limited gains in the first
quarter for European equities, following a strong run in the
second half of 2012 after the European Central Bank pledged new
measures to tackle the debt crisis which had led to fears of
However, traders said that those betting on a market fall
with 'short' positions were increasingly cancelling those bets
to cover their losses and instead buying, contributing to the
The pan-European FTSEurofirst 300 index ended up 0.3
percent at 1,171.06 points - a new closing high for 2013.
Earlier in the day, the index had reached an intraday high of
1,171.78 points, its best level since early March 2011.
The euro zone's blue-chip Euro STOXX 50 index
gained 0.5 percent to 2,722.96 points, with stock markets
further boosted after the U.S. S&P 500 index rose above
the key 1,500 point level for the first time since December
Mirabaud Securities' European equity sales executive Rupert
Baker said investors were prepared to overlook lingering signs
of economic weakness, such as a downturn in France, and were
favouring German equities over other regional European markets.
PMI business survey data from Germany showed its private
sector expanding at its fastest pace in a year this month. But
in France it showed a deepening downturn.
Baker added that investors were increasingly moving away
from bonds and cash - where returns have been hit since interest
rates have been held at near record lows - to equities, which
offer better returns via dividend payouts.
"People want to see the glass half-full," said Baker.
"There's a lot of cash around not earning very much money,
and some of that has to go into equities," he added.
VODAFONE AND ROCHE RISE
Gains at heavyweight telecoms stock Vodafone and
pharmaceuticals company Roche added the most points to
the FTSEurofirst 300 index.
Vodafone rose 3.2 percent, which traders said was partly due
to comments from major U.S. hedge fund manager David Einhorn who
told investors this week that he had added to his position in
Traders added that renewed speculation that Vodafone might
sell its stake in the Verizon Wireless venture with U.S. group
Verizon had also boosted Vodafone.
Roche rose 1.6 percent, which traders said was due to an
approval by the U.S. Food & Drug Administration (FDA) for its
However, mobile phone maker Nokia fell 5.5
percent after announcing plans to axe its dividend in order to
shore up its cash position.
Analysts at Bank of America Merrill Lynch kept an
"underperform" rating on Nokia, writing in a research note that
Nokia's gross margins and channel inventories were "not
The Euro STOXX 50 index has a current relative
strength index (RSI) reading of around 63 points - below the 70
point mark which means an index is in technically "overbought"
territory, and suggesting it has room to rise in coming days.
The Euro STOXX 50 is also trading above the index's 200-day
and 50-day simple moving average levels, which are further
technical indicators to suggest the index has scope for more
Moustapha Awada, who heads up quantitative trading firm
Sunofia Advisers, said worries over the U.S. debt situation and
the possibility of slower Chinese economic growth could lead to
a pullback on equities in the first quarter.
However, he expected an overall rally during the course of
"We could potentially see some pullback from debt ceiling
problems in the U.S. and slower growth in China, but I see the
potential for equities to keep going up," he said.