Europe shares extend rally; Deutsche Telekom soars

PARIS Wed May 8, 2013 11:33am EDT

PARIS May 8 (Reuters) - European shares rose on Wednesday, extending their three-week rally to fresh multi-year highs and with Deutsche Telekom surging after forecast-beating earnings.

The FTSEurofirst 300 index of top European shares provisionally finished 0.7 percent higher at 1,229.82 points, its highest closing level since mid-2008, while the euro zone's blue chip Euro STOXX 50 index added 0.6 percent at 2,784.66, a near two-year closing high.

The two indexes have risen about 7 and 9 percent respectively over the past three weeks on the back of strong support from central banks, and technical momentum indicators such as the relative strength index (RSI) show that stocks are now 'overbought' and ripe for a pull-back.

"The market is on life support from the central banks. The level of complacency in the market is very high at the moment and we could get a correction anytime," FXCM analyst Nicolas Cheron said.

"It's time to take profits on a number of stocks that have performed well lately, and to hedge the portfolios."

Deutsche Telekom was the best performing blue chip on Wednesday, up 5.2 percent to a seven-month high after the German telecom operator posted slightly better-than-expected earnings and reaffirmed its profit outlook for the year.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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