Paris - European stocks inched up on Tuesday, extending a three-week rally, led by gains in defensive Swiss blue-chips such as pharma group Novartis, boosted by an upbeat broker note.
At 16:14, the FTSEurofirst 300 index of top European shares was up 0.1% at 1 395.33 points, led by Novartis, up 1.9%, Roche, up 1.8%, and Nestle, up 1.1%.
"It's a positive sign to see defensive sectors gaining traction. Not just cyclicals are in vogue. It confirms that the bull trend is healthy and should last for a while," said Alexandre Tixier, analyst at TradingSat, in Paris.
"Resilient trading volumes are also a positive sign, with more and more retail investors getting in. The overall picture eclipses the fact that charts might show 'overbought' conditions in the short term."
The euro zone's blue-chip Euro STOXX 50 index was down 0.1% on Tuesday, at 3 303.71 points.
The benchmark index, which has surged 5.4% in the past three weeks - boosted by the European Central Bank's fresh measures to support the region's economic recovery - slipped into "overbought" territory on Tuesday.
Its relative strength index (RSI), a widely-used momentum indicator, hit 71, with 70 and above considered "overbought", which could signal a pause in the rally or a pull-back in the short term.
Profit-taking was seen in Madrid, with the IBEX losing 0.5%. But despite Tuesday's dip, the Spanish benchmark remains up 12% in 2014, well ahead of UK's FTSE 100 up 1.6% over the same period, and Germany's DAX, up 4.8%.
Barclays France director Franklin Pichard said the backdrop of support from the ECB - which cut rates last week - and a pick-up in corporate merger and acquisition (M&A) activity would ensure that the rally should continue.
"Investors' appetite for stocks is still very strong, and the latest measures from the ECB is fuelling the rally started two years ago. We still have to see the economic impact from these measures, but meanwhile M&A activity should help keep the market rally alive," said Pichard.
Gemalto rose 2.2%, making it one of the best-performing stocks on the FTSEurofirst 300, after the company won a deal with China Telecom.