December 27, 2013 / 9:01 AM / 4 years ago

European shares climb as Germany's DAX hits new high

* DAX rises 0.8 percent to set new record high

* FTSEurofirst and Euro STOXX 50 both rise 0.6 pct

* DAX close to technically “overbought” territory

* Xmas sales season sees retail stocks rise

By Sudip Kar-Gupta

LONDON, Dec 27 (Reuters) - European shares climbed on Friday as Germany’s DAX equity index hit a record high, with the region’s markets tracking all-time closing highs on Wall Street and gains in Asia.

The pan-European FTSEurofirst 300 index rose by 0.6 percent to 1,307.02 points early in the session, pushing it back near the five-year high of 1,316.42 points reached in early November.

The euro zone’s blue-chip Euro STOXX 50 index advanced 0.6 percent to 3,090.52 points while the DAX rose as much as 0.8 percent to an intraday record high of 9,567.53 points before edging back to trade up 0.7 percent at 9,555.85 points.

The DAX has risen by around 26 percent since the start of 2013, outperforming a 15 percent advance on the FTSEurofirst 300 and a 17 percent rise on the Euro STOXX 50.

This partly reflects Germany’s role as the powerhouse behind the economic recovery in the euro zone, with data this month showing German consumer morale had reached its highest level in nearly 6-1/2 years.

“We always have a preference for buying Germany whenever there is a reason to buy any European equity market since the euro currency works most in favour of Germany,” said Richard Edwards, head of trading and research firm HED Capital.

However, Edwards felt the DAX’s rally may peter out in the near term and recommended trimming back positions on that index in order to book profits.

“Be very careful with long positions here and consider taking profits very soon,” he added.

Technical analysis charts show the DAX has a “relative strength indicator” reading of just under 70 - hovering just below the technically “overbought” level which occurs when the RSI reading goes above the 70 point mark.

Retail stocks also performed well in light of the Christmas holiday sales season when companies slash prices in order to lure in shoppers.

The STOXX Europe 600 Retail Index was up by 0.6 percent, and Hobart Capital equity sales trader and director Justin Haque said his favoured stocks in the sector included Inditex and HMB as he felt they would do well out of the Christmas holiday sales season.

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