* FTSEurofirst 300 up 1.6 pct, EuroSTOXX 50 up 2 pct
* Technical charts signal caution while downward gap remains
* Mining companies the only weak sector
By Toni Vorobyova
LONDON, June 26 (Reuters) - European shares were on track
for their biggest two-day gain since April on Wednesday, after a
month-long downward trend, thanks to robust U.S. data.
U.S. durable goods orders, new home sales and consumer
confidence all came in better than expected on Tuesday,
offering some reassurance that the world's biggest economy may
be strong enough to cope if the Federal Reserve scales back its
stimulus programme in coming months as planned.
There was also some reassurance from China, where a central
bank pledge to prevent any lasting credit crunch helped calm
That helped the FTSEurofirst 300 index gain 1.6 percent to
1,148.56 points by 1002 GMT, adding to the previous day's 1.2
percent rise and trimming its fall from May's 5-year peak to
less than 9 percent.
"The move down was about a very complacent market in terms
of risk metrics ... We have been chasing our tails in terms of
bringing risk levels to normalisation, and I think that has now
occurred," said Steen Jakobsen, CIO at Saxo Bank.
"I am myself personally long the market and risk for the
first time in two months based on underlying data in Europe and
the U.S. improving combined with the fact that we had a clean
out. I think after this sell-off we are in for a correction back
up over the next month or two."
The move higher helped European indexes rise above some
technical resistance levels, with EuroSTOXX 50 breaking above
the 23.6 percent Fibonacci retracement of the past month's fall
to trade 2 percent higher at 2,594.90 points.
However, technical analysts remained cautious about the
market, with the EuroSTOXX 50 chart still showing a downside gap
between 2,678.03 and 2,651.81 points, which opened up last week.
"Bounces are likely but should be short-lived," said David
Furcajg, technical analyst at 3rd Wave Consult.
"A risk of a new downside move towards the 2,450 points
support level and 50 percent retracement of the
June-2012/June-2013 up-leg is the most likely scenario."
Among individual stocks, Belgian retailer Colruyt
was a top gainer, up 8 percent after posting bigger-than
expected annual profit and raising its dividend.
Basic resources was the only loser, down 0.4 percent
in the face of weak metals prices and persistent
negative analyst comment, with Credit Suisse the latest bank to
cut price targets.