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European markets in choppy open

Friday, March 15 08:45:08

European shares opened mostly flat today as equity markets continued to show impressive strength, supported by central bank stimulus and an improving U.S. economy, although trading will be choppy amidst a big options expiry.

By 0803 GMT, the FTSEurofirst 300 was up 0.33 of a point to 1,208.16, following the previous day's sharp rally, although traders cautioned share prices could be volatile on Friday as quarterly and monthly futures and options expired, which means some investors will be rebalancing their portfolios.

Technical indicators show the FTSEurofirst 300 and national indexes had stepped into "overbought" territory on the 14-day Relative Strength Index (RSI), a momentum indicator, which was leading some traders to take profit on their stocks and could limit gains early on Friday.

"You have screaming bearish divergence signals on various technical indicators such as the RSIs but it has been like that for a while and the market just keeps pushing away to the upside," Gerry Celaya, chief strategist at Red Tower Research, said.

Celaya said markets are acting as if things have never been better but with central bank support inflating equities and improving economic data in the United States, there are not too many other asset classes which offer the returns equities do at this time.

He said the next target for Germany's DAX will be 8,151 and for the FTSE 100 6,754, both their 2007 peaks. ( C) Reuters