* FTSEurofirst 300 down 0.3 pct, Euro STOXX 50 down 0.1 pct
* Luxury goods sector among worst performers
* Market cautious ahead of Bernanke testimony
By Sudip Kar-Gupta
LONDON, May 22 European shares edged back on
Wednesday from multi-year highs as the luxury goods sector
lagged, with many investors reluctant to take new positions
before comments on policy from the head of the U.S. Federal
The pan-European FTSEurofirst 300 index, which has
hit 5-year highs this month, slipped 0.3 percent to 1,249.80
points, while the euro zone's blue-chip Euro STOXX 50 index fell
0.1 percent to 2,820.35 points.
World stock markets have rallied on injections of liquidity
and interest rate cuts by central banks, which have hit returns
on bonds and cash, driving investors to seek the better returns
available on equities.
Traders and analysts generally felt any pull-from recent
market highs would be relatively minor.
Some also said investors would trade cautiously in the
run-up to congressional testimony from U.S. central bank head
Ben Bernanke later in the day, expected to provide clues on the
bank's future policy.
Terry Torrison, managing director at Monaco-based McLaren
Securities, said some investors may book profits on the recent
rally. "We are due a slight rest, but I wouldn't want to be
'short' of this market. Any pullback presents a buying
opportunity," he said.
LUXURY GOODS STOCKS FALL
The STOXX Europe 600 Personal and Household Goods Index
, which contains major luxury goods companies, was
Europe's worst-performing sector with a 1.1 percent decline.
UK luxury goods group Burberry fell 2.9 percent a
day after posting higher profits. Traders said investors were
selling the stock following a 20 percent gain since the start of
Technical analysis firm Lowry Research felt key European
markets may make little headway in the near term.
The Euro STOXX 50 index has a relative strength indicator
(RSI) reading of nearly 70, indicating it is heading into
technically "overbought" territory, while the DAX has already
entered "overbought" ground with a RSI reading of 77.
"The German market is overextended on a short-term basis, so
a brief pause in the rally in the days ahead is likely," said
Lowry Research analyst Jordan Kohley.
The DAX has risen 11 percent this year to all-time