* FTSEurofirst 300 up 1.8 pct, highest close since 2008
* Charts positive but with dose of caution - Aviate Global
* F&C recommends taking profits on European equities
By Toni Vorobyova
LONDON, March 5 Europe's top equity indexes
bounced to multi-year highs on Tuesday, propelled by the breach
of key technical levels, a crop of upbeat corporate outlooks and
the prospect of continued stimulus from global central banks.
The European Central Bank, the Bank of England and the Bank
of Japan are all expected to stick to ultra easy monetary policy
at meetings this week, following on from reassurances by U.S.
Federal Reserve officials that their stimulus programme is also
here to stay, for now.
Analysts even see some scope for fresh action in Europe on
Thursday, giving a 40 percent chance for more bond buying from
the Bank of England and a 10 percent likelihood
of an interest rate cut from the ECB.
A rally in the U.S. Dow Jones Industrial Average to
record intra-day highs helped European bourses accelerate gains
in afternoon trade, as did stronger than expected data on the
U.S. services sector.
The pan-European FTSEurofirst 300 index closed up 1.8
percent at 1,189.02 points, its highest finish in 4-1/2 years
but just short of the February 2011 intra-day peak of
"There are many (European) stocks hitting yearly new highs
and that's positive," said Riccardo Ronco, head of technical
analysis at Aviate Global, noting particular strength in
industrials, consumer discretionary and consumer staples.
"I am not fighting that kind of information because it is
very strong. But this is a very messy market ... You should
tighten your stop-losses and you have to be in the right
He highlighted the relative underperformance of the
EuroSTOXX 50 euro zone blue chip index, which
despite adding 2.4 percent on Tuesday is still worth less than
half of its life high set in 2000, as one reason for caution.
"If the leaders do not lead, then what happens to the rest?
So follow the trend, by all means, don't fight the Fed, but you
have to select very carefully where you put your money," he
Tuesday's volumes also added a note of caution, coming in
markedly below the activity seen during recent big sell offs.
Among individual stocks, Deutsche Post and
British energy services firm Wood Group cashed in on
brighter outlooks, adding 5.8 and 7.9 percent, respectively,
while Fiat rose after confirming its 2013 targets.
Commodities group Glencore and miner Xstrata
, also rallied after reporting what could be their last
set of individual results before a planned merger and raising
But overall the 2012 earnings season in Europe has been
relatively soft, with around 42 percent of large and mid-cap
companies missing forecasts to-date against just 31 percent of
in the United States, according to Thomson Reuters Starmine
"There seems to be a bit of a decoupling opening up between
the United States, which seems to be moving onto a sustainable
growth path, and Europe," said Ted Scott, director of global
strategy at asset manager F&C.
"With the rally in the markets, they are no longer
undervalued from our point of view and the underlying economic
fundamentals haven't change that much ... I would say it's time
to take profits in the German market as well as other euro zone