European shares pull back from 5-1/2 year highs
* FTSEurofirst 300 dips 0.5 pct
* RWE weighs on utilities, China data hits miners
* Index touches highest levels since 2008 in early trade
* Fiat jumps 12.5 pct after deal to buy Chrysler
LONDON, Jan 2 (Reuters) - European shares touched fresh 5-1/2 year highs on Thursday before slipping back, hit by weakness in utilities and miners after a strong end to 2013 left the region's equities in overbought territory.
Fiat lent some support to the market though, surging 12.5 percent after the Italian carmaker gained full control of Chrysler.
Utilities were the worst-performing sector, down 0.8 percent and pegged back by a 2 percent fall in RWE after a media report sparked concern that Germany's No. 2 utility may be considering a capital increase.
News that China's factory activity slowed in December dented the basic resources sector, down 0.7 percent, as the data raised concern about the strength of demand in the world's second-largest economy and biggest metals consumer.
The pan-European FTSEurofirst 300 was down 0.5 percent at 1,309.89 at 1041 GMT. It has gained more than 6 percent since the middle of December.
The relative strength index (RSI) was above 70 before the index pared gains, indicating that it was in "overbought" territory and due some consolidation.
The FTSEurofirst rallied 16.1 percent in 2013 in its best showing since 2009 thanks to ample liquidity from global central banks and early signs of an economic recovery in Europe.
"It was a cracking end of the year for European stocks, and I expect a continuation of the same," said Robert Quinn, chief European equity strategist at Standard & Poor's.
"Some argue that what happens on the first day of the year can reflect what happens for the rest of the year - that's too simplistic for me," he said.
"We're only down a fraction of a percent, and because we've had such a strong run up, I don't see any cause for concern."
Fiat shares traded in heavy volume of 3.3 times their 90-day average after the company tied up a deal to buy the remaining 41.46 percent of American carmaker Chrysler that it did not already own, after over a year of protracted talks.
Italian investment firm Exor, Fiat's majority stakeholder, rose 4.6 percent, and the two stocks were the FTSEurofirst 300's top two gainers.
Analysts at Citi said that the resolution of uncertainty over the tie-up, the slightly lower price than some had expected and Fiat's statement that it didn't envision the need to raise capital through a rights issue to finance the deal were all supportive factors for Fiat's share price.
Overall market volumes were light, at 25 percent of an already low 90-day average, and traders said that the seasonal fund flows that often fuel gains in January might not pick up until next week, as this week was interrupted by New Year holidays.
"People are still in holiday mode, and it might not be before next week that we see volume come back to the market," David Madden, analyst at IG, said.
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