February 6, 2013 / 10:17 AM / 5 years ago

Europe shares extend recovery, gains capped

* FTSEurofirst 300 up 0.4 pct, Euro STOXX 50 up 0.1 pct
    * Euro STOXX 50 capped by 50-day moving average
    * Cholet Dupont strategist recommends buying on dips

    By Blaise Robinson
    PARIS, Feb 6 (Reuters) - European stocks rose in early trade
on Wednesday, extending the previous session's recovery with an
upbeat outlook from ArcelorMittal reassuring
    Shares in the world's largest steelmaker gained 2.3 percent,
bouncing back from a recent 10 percent slide after the company
forecast improved demand and earnings in 2013.
    At 0940 GMT, the FTSEurofirst 300 index of top 
European shares was up 0.4 percent at 1,159.33 points.
    The euro zone's Euro STOXX 50 index was up 0.1
percent at 2,652.97 points, extending Tuesday's gains but capped
by strong resistance at 2,660 points. 
    The STOXX 50 had suffered a 3.1 percent sell-off on Monday,
sparked by worries over a corruption scandal in Spain and polls
showing Italy's former prime minister Silvio Berlusconi
regaining ground before elections this month.
    Analysts said they expected political concerns to continue
to weigh though shares as an asset class looked set to remain in
demand - likely making for a volatile market. 
    "Now that the systemic risks (to the euro zone) are
contained, the correction phases should be less violent than in
2011 and 2012," Cholet Dupont strategist Vincent Guenzi said.
    "We recommend taking advantage of these pull-backs to boost
exposure to equities in portfolios. The equity market will
continue to rise by phases, with a growing appetite for the
asset class from investors."
    Cholet Dupont is 'overweight' European equities, seen as
lagging U.S. stocks.
    Around Europe, Britain's FTSE 100 index was up 0.4
percent, Germany's DAX index up 0.2 percent and
France's CAC 40 up 0.1 percent.
    French group Vinci featured among the top fallers,
down 2.3 percent after warning of a flat year for its
construction and concessions businesses.
    Dutch telecom group KPN fell 3.8 percent, adding to
Tuesday's 16 percent plunge triggered by the company's plan to
launch a rights issue to reduce its debt load and protect its
credit rating.
    Shares in miners and steelmakers gained ground, buoyed by
ArcelorMittal's outlook as well as by rallying metal prices,
with London copper futures trading near four-month
    Salzgitter was up 2.6 percent and Lonmin 
up 2.9 percent.
    The Euro STOXX 50 was capped by strong resistance at the
index's 50-day moving average of 2,660 points. Failing to move
back above the level in the next few days would send a negative
technical signal, chartists said.
    "Monday was a warning that things aren't that rosy, with
lots of macro and political risks out there. European indexes
might have hit their peak for the next six months," Montaigne
Capital fund manager Arnaud Scarpaci said.  
    "The potential for a further rise in volatility is extremely
high. The best thing to do is intraday trading in Europe, or buy
U.S. stocks, which are set to benefit from a better macro
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