* FTSEurofirst 300 flat, close to 4-1/2 yr highs
* Trade seen choppy on option expiry set for around 1015 GMT
* Credit Suisse upgrades year-end FTSE target to 7,000
* Bouygues Telecom rallies ahead of 4G switch
By David Brett
LONDON, March 15 European shares opened flat on Friday, holding near recent highs thanks to central bank stimulus and an improving U.S. economy on what could be a choppy trading day due to a big options expiry.
By 0843 GMT, the FTSEurofirst 300 was down 0.8 of a point at 1,207.03, close to four-and-a-half year highs following the previous day's sharp rally.
Traders said shares prices could be volatile as quarterly and monthly futures and options expire, which means some investors will rebalance their portfolios.
Technical indicators showed the FTSEurofirst 300 and national indexes had stepped into "overbought" territory on the 14-day Relative Strength Index (RSI), a momentum indicator, which led some traders to take profits.
"You have screaming bearish divergence signals on various technical indicators such as the RSIs but it has been like that for a while and the market just keeps pushing away to the upside," Gerry Celaya, chief strategist at Red Tower Research, said.
Central bank stimulus was inflating share prices and U.S. economic data was also benefiting the market, he said, pegging the next target for Germany's DAX at 8,151 and for Britain's FTSE 100 at 6,754, both indexes' 2007 peaks.
Credit Suisse repeated its bullish view on shares, keeping its 4 percent "overweight" stance and raising its year-end FTSE target to 7,000 from 6,600. The investment bank also sees a funds flow squeeze into equities from both retail and institutional buyers.
Among top gainers, France's Bouygues Telecom rose 7.3 percent after wining permission to re-use mobile spectrum deployed for voice calls for fourth-generation mobile data services as of Oct. 1, raising pressure on its competitors.
Broker upgrades propelled British Airways owner International Airlines and temporary power provider Aggreko 3.2 percent and 2.1 percent higher, while chip designer ARM Holdings climbed 2.1 percent as broker Jefferies upgraded the firm to "buy" from "hold".
Vivendi fell 4 percent after DirecTV, the largest U.S. satellite television provider, ended its pursuit of Vivendi's GVT.
Swiss luxury chocolate maker Lindt & Spruengli and Budget fashion retailer Hennes & Mauritz shed 2.1 percent and 0.5 percent, respectively, after results.
German carmaker Volkswagen slipped 2 percent on talk Deutsche Bank was placing VW preference shares in a price range of 156.25-160.25 euros, two traders told Reuters on Friday.
The Pentagon releases photographs linked to allegations of abuse of detainees in Iraq and Afghanistan.