* 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 (Reuters) - 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 Reserve.
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.
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 2013.
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 highs.