European shares slip from five-year highs
Reuters, Tuesday 21 May 2013

European shares edged back on Tuesday from five-year highs, with some traders citing concerns over a possible end to central bank stimulus measures which have led a global equity market rally this year.

The pan-European FTSEurofirst 300 index fell 0.3 percent to 1,248.87 points, while the euro zone's blue-chip Euro STOXX 50 index declined 0.4 percent to 2,812.41 points.

Germany's DAX index, which has also hit record highs this month, retreated by 0.4 percent, with the DAX currently showing a relative strength index (RSI) reading of 78 - showing it is technically "overbought" territory.

Berkeley Futures associate director Richard Griffiths said some investors were selling equities in order to book profits ahead of testimony by U.S. Federal Reserve head Ben Bernanke on Wednesday.

Some traders have voiced concerns that Bernanke may signal an end to a programme of quantitative easing (QE) which has spurred a rally on global equities this year.

"With the economic numbers being pretty good in the States, there may be an easing back of QE sooner rather than later," Griffiths said.

"The DAX and Euro STOXX have moved ahead a lot more than the UK, so in the event of any profit-taking in the U.S., the European markets may drop just that little bit more," he added.

Tracy Knudsen, senior vice-president at technical analysis firm Lowry Research, also felt the DAX would pause in the near-term.

"The German market is overextended on a short-term basis, so a brief pause in the rally in the days ahead is likely," she said.