* FTSEurofirst 300 up 0.4 percent
* Germany's DAX rises 0.9 pct to set new record high
* Volatility touches six year low
* Fresenius Medical Care jumps on reimbursement news
By Alistair Smout
LONDON, Nov 25 European shares headed towards a five-year high and Germany's DAX set a new record on Monday, with airline stocks and French car makers getting buoyed by the nuclear deal between Iran and world powers.
The deal eased geopolitical tension and lifted risk appetite in markets globally, as the West relaxed its sanctions against Iran in return for Tehran curbing its nuclear programme at least temporarily.
Travel and leisure stocks rose 1.6 percent, the top sectoral gainer, led up by airlines.
Pressure on the oil price after the deal, which included easing a ban on European insurance for shipments of Iranian oil that may help smooth Iran's crude exports to its big Asian customers, hit energy stocks.
"The Iran deal helping risk-sensitive stocks in the short term, but the equity risk premium is only slightly lower, and stocks have only nudged a bit higher," Jeremy Batstone-Carr, analyst at Charles Stanley, said.
"It's a good start but it's too early to say what the long term effects of the deal will be."
IAG, the owner of British Airways and Iberia, rose 2.8 percent, Air France KLM advanced 1.9 percent and easyJet gained 2.1 percent.
French car makers PSA Peugeot Citroen and Renault , which had a significant exposure to the Iranian car market before western sanctions against Tehran were toughened, gained 5.1 percent and 1.4 percent respectively. Energy shares , however, fell 0.5 percent.
The pan-European FTSEurofirst 300 was up 0.4 percent at 1,302.24 points, while Germany's DAX rose 0.8 percent - a record high close.
The VSTOXX volatility index, a widely followed gauge of investor nerves about the market, touched its lowest level since 2007.
The euro zone's blue-chip Euro STOXX 50 index rose 0.6 percent to 3,072.75 points, with technical analysts positive on the index's outlook.
"The measured trend of the Euro STOXX 50 index remains bullish, with the slope of the 200-day moving average positive," Murray Gunn, head of technical analysis at HSBC Bank, said.
He saw support for the index at its recent low of 3,016 and said a move below 2,999, a low on Nov. 8, would be the first indication that the trend was changing.
Among top individual movers, German dialysis provider Fresenius Medical Care surged 7 percent, the top gainer on the FTSEurofirst 300, after a U.S. healthcare agency said it would not cut reimbursement rates for kidney dialysis in 2014 as was proposed in July.