European equities scale new heights as DAX drives forward

Reuters - UK Focus

* DAX sets new record high

* Gemalto (Other OTC: GTOFF - news) boosted by Chinese contract

* Barclays (LSE: BARC.L - news) upgrade lifts Novartis (Xetra: NOT.DE - news)

* FTSEurofirst 300 up 0.2 pct

By Blaise Robinson

PARIS, June 10 (Reuters) - European equities climbed to new peaks on Tuesday, with Germany's DAX stock market setting a new record high.

Drugmaker Novartis and digital security company Gemalto were among the top performers as the region's stock markets extended their rally following the European Central Bank's new economic stimulus measures last week.

The pan-European FTSEurofirst 300 index was up by 0.2 percent at 1,396.75 points by the middle of the trading day, setting a new peak for 2014 and reaching its highest level since early 2008.

Germany's DAX was up by 0.2 percent at 10,028.32 points, having earlier in the day set a record high of 10,033.74 points.

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 stock market rally should remain intact.

"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.

A 0.6 percent gain at Novartis gave one of the biggest lifts to the FTSEurofirst 300, after Barclays raised its rating on Novartis to "equal weight" from "under weight".

Gemalto also rose 2.3 percent, making it the best-performing stock on the FTSEurofirst 300, after the company won a deal with China Telecom.

"On a short-term basis, the momentum could slow down," said Philippe Delabarre, an analyst at Trading Central in Paris.

"But this is not going to prevent the continuation of the rise."

Europe bourses in 2014: http://link.reuters.com/pap87v

Asset performance in 2014: http://link.reuters.com/gap87v

Today's European research round-up (Additional reporting by Francesco Canepa; Editing by Catherine Evans)