European shares scaled fresh five-year highs on Friday, led by telecoms and healthcare stocks, and traders said key indexes had scope for further gains, with any near-term pullback likely to be short-lived.
The pan-European FTSEurofirst 300 index closed up 0.4 percent at 1,233.49 points, its best level since mid-2008.
The euro zone's blue-chip Euro STOXX 50 index rose 0.4 percent to 2,785.24 points, while Germany's DAX index ended up 0.2 percent at a fresh record closing high of 8,278.59 points.
Injections of liquidity and rate cuts by central banks have hit returns on bonds and driven investors to seek better returns on equities. This has enabled world stock markets to rally over the last year, with the FTSEurofirst 300 up nearly 10 percent since the start of 2013.
Some analysts said the market was getting vulnerable to a pull-back after the recent sharp gains, but the overall trend remained positive.
"People are going to lock some profits in at the end of a good up-week, but you've still got to buy the dips. I can't see anything to make it go off by too much," said Darren Courtney-Cook, head of trading at Central Markets Investment Management.
Courtney-Cook sold some DAX futures contracts at 8,350 points but added many investors were putting in new "long" positions to bet on further gains on the DAX.
"I'm seeing new 'longs' going into the DAX, 100 percent new money buying," he said.
TELECOMS AND HEALTH STOCKS RISE
The STOXX Europe 600 Telecoms Index was the best-performing European equity sector, advancing 2.1 percent as BT surged 12.3 percent after posting higher profits and raising its dividend.
The STOXX Europe 600 Healthcare Index was the next best-performing sector, rising 1.2 percent as Swiss company Novartis advanced 2.1 percent after gaining U.S regulatory approval for one of its products.
Some technical analysts said the emergence of a negative-looking "candlestick" pattern on the Euro STOXX 50 and DAX could herald a near-term retreat.
However, Berkeley Futures associate director Richard Griffiths felt the DAX could push on to the 8,400 point level while the Euro STOXX 50 could advance to the 2,800 point mark.
Griffiths added that investors who had sold 'call' options to bet on more gains for equities were now scrambling to buy them back, in light of the equity market's extended rally.
"There's still room for a little bit more on the upside because this move has been so strong," he said.
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