Europe shares halt 3-week rally; mood still bullish

PARIS Tue Feb 25, 2014 3:15am EST

PARIS Feb 25 (Reuters) - European shares dipped early on Tuesday, pausing after a three-week rally, although the overall mood remained bullish with further positive corporate results and a number of U.S. and European equity indexes reaching key levels.

BASF was up 0.3 percent after the world's largest chemicals company by sales posted better-than-expected quarterly profits.

At 0806 GMT, the FTSEurofirst 300 index of top European shares was down 0.3 percent at 1,348.30 points, after gaining about 7 percent in the past three weeks.

The recent stock rally has propelled a number of indexes to key levels, with France's CAC 40 hitting a 5-1/2 year high on Monday and the FTSE 100 closing just 1.2 percent shy of its record high hit in December 1999, while on Wall Street, the S&P 500 hit a record intraday high.

"All the lights are turning 'green' and indexes are crossing resistance levels. A majority of traders are bullish," said Guillaume Dumans, co-head of research firm 2Bremans.

On the short-term, however, technical charts show indexes reaching 'overbought' levels, which was prompting some investors to book some profits.

"The long-term trend is still bullish: shallow dips and strong rebounds, which are boosted in part by short covering and by further buying from investors who are not 'long' enough," Aurel BGC chartist Gerard Sagnier said.