European stock markets hit fresh 2012 highs on Thursday, boosted by chemicals group Bayer and defence firm EADS, and some traders eyed more rallies after equity indexes broke key resistance levels.
The pan-European FTSEurofirst 300 index was up by 0.3 percent at 1,127.04 points by around midday, after reaching an intraday peak of 1,132.79 points which was its best level for 2012.
The euro zone's blue-chip Euro STOXX 50 index also set a 2012 high by rising to an intraday peak of 2,617.83 points, although it later edged back to 2,594.52 points, up 0.1 percent on the day.
Technical analysts said the fact that the Euro STOXX had at one stage managed to clear the 2,610 level pointed to more potential rallies, provided it could close above that level.
"The potential for this symbolic formation which has been building for about a year now extends out to next spring, and could see the index climbing towards the 3,000 points zone, or 15 percent plus upside," said Societe Generale chartist Loic De Galzain.
U.S. FISCAL FEARS LINGER
German company Bayer added the most points to the FTSEurofirst 300 index, rising 4 percent to a new 2012 high of 73 euros after its Eylea eye product was submitted for European Union marketing authorisation.
"The EU approval of the eye drug Eylea has definitely supported the interest in the share, helping it to post strong gains in today's session," said Gekko Markets sales trader Anita Paluch.
"I think the fact that the price performance is on the all-time high has attracted many buyers wanting to jump on the train," she added.
EADS also gained 7.6 percent after its shareholders agreed an overhaul of its ownership structure, with Bank of America Merrill Lynch raising its rating on the stock to "buy" from "neutral".
However, French utility GDF Suez was the biggest European blue-chip casualty, slumping by 12 percent after warning of lower profits.
Some traders said they would be tempted to sell shares on the back of rallies due to uncertainty over the outcome of U.S. budget negotiations.
U.S. politicians remain in talks over trying to reach an agreement over the "fiscal cliff" - a combination of government spending cuts and tax rises due to be implemented under existing law in early 2013 that may cut the federal budget deficit but also tip the economy back into recession.
Central Markets senior broker Joe Neighbour said he would be tempted to sell the Euro STOXX 50 index while it remained below the 2,635 point level.
Tiverton Trading portfolio manager Luc Bocahut was more positive and was considering going "long" on European equities by betting on further gains.
He said pledges by the European Central Bank (ECB) for new measures to fix the euro zone's sovereign debt crisis were alleviating the region's problems, with the borrowing costs of debt-ridden countries such as Spain and Italy falling.
"Going 'long' now may not be such a bad idea. The European situation is less of a concern now."