* FTSEurofirst 300 up 0.1 pct, Swiss SMI up 1.1 pct
* "Overbought" Euro STOXX 50 up 5.4 pct in 3 weeks
* Barclays recommendation upgrade lifts Novartis
By Blaise Robinson
PARIS, June 10 European stocks inched up on
Tuesday, extending a three-week rally, led by gains in defensive
Swiss blue-chips such as pharma group Novartis,
boosted by an upbeat broker note.
At 1414 GMT, the FTSEurofirst 300 index of top
European shares was up 0.1 percent at 1,395.33 points, led by
Novartis, up 1.9 percent, Roche, up 1.8 percent, and
Nestle, up 1.1 percent.
"It's a positive sign to see defensive sectors gaining
traction. Not just cyclicals are in vogue. It confirms that the
bull trend is healthy and should last for a while," said
Alexandre Tixier, analyst at TradingSat, in Paris.
"Resilient trading volumes are also a positive sign, with
more and more retail investors getting in. The overall picture
eclipses the fact that charts might show 'overbought' conditions
in the short term."
The euro zone's blue-chip Euro STOXX 50 index
was down 0.1 percent on Tuesday, at 3,303.71 points.
The benchmark index, which has surged 5.4 percent in the
past three weeks - boosted by the European Central Bank's fresh
measures to support the region's economic recovery - slipped
into "overbought" territory on Tuesday.
Its relative strength index (RSI), a widely-used momentum
indicator, hit 71, with 70 and above considered "overbought",
which could signal a pause in the rally or a pull-back in the
Profit-taking was seen in Madrid, with the IBEX
losing 0.5 percent. But despite Tuesday's dip, the Spanish
benchmark remains up 12 percent in 2014, well ahead of UK's FTSE
100 up 1.6 percent over the same period, and Germany's
DAX, up 4.8 percent.
Barclays France director Franklin Pichard said the backdrop
of support from the ECB - which cut rates last week - and a
pick-up in corporate merger and acquisition (M&A) activity would
ensure that the rally should continue.
"Investors' appetite for stocks is still very strong, and
the latest measures from the ECB is fuelling the rally started
two years ago. We still have to see the economic impact from
these measures, but meanwhile M&A activity should help keep the
market rally alive," said Pichard.
Gemalto rose 2.2 percent, making it one of the
best-performing stocks on the FTSEurofirst 300, after the
company won a deal with China Telecom.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Editing by Andrew Roche)