European shares ease from highs ahead of Fed

* FTSEurofirst 300 down 0.2 percent after six days of gains

* Mining shares among top fallers; sector index down 1 pct

* Focus on U.S. Federal Reserve’s policy meeting

* For up-to-the minute market news, click on [STXNEWS/EU]

By Atul Prakash

LONDON, Dec 14 (BestGrowthStock) – European shares edged lower on
Tuesday as investors paused for breath ahead of a U.S. Federal
Reserve policy meeting, though sentiment remained positive and
more gains were seen likely after 26-month highs a day earlier.

At 1221 GMT, the FTSEurofirst 300 (.FTEU3: ) index of top
European shares was down 0.2 percent at 1,126.84 points, after
rising for a sixth session on Monday — the longest winning run
in five months.

The benchmark index is up 7.8 percent this year, after a 26
percent jump in 2009.

Miners featured among the top fallers, as investors took
profits after the STOXX Europe 600 basic resources index (.SXPP: )
rose more than 11 percent in the past two weeks. The index was
down 1 percent, BHP Billiton (BLT.L: ) fell 0.7 percent, while Rio
Tinto (RIO.L: ) was down 1 percent.

Market participants are cautious as the year draws to a
close, with volumes on the FTSEurofirst 300 staying just 9
percent of its 90-day daily average by midday.

“Volumes are quite low, which is possibly causing some
concern,” said Graham Bishop, equity strategist at RBS.

“But we still retain our bullish view for the course of next
year as valuations are still very attractive, you are going to
see earnings growth surprise on the upside and you have got
massive monetary stimulus still.”

Investors waited for the last scheduled meeting of Fed
policy-makers in 2010 later in the day that follows a dramatic
rise in yields on Treasury bonds. The central bank is expected
to stay in a holding pattern and is unlikely to show any signs
of scaling back its monetary stimulus. [ID:nFEDAHEAD]

“My expectations are nothing big to be announced. They will
show support for the QE2, but I can’t imagine that they will
extend, be more dovish or will be more hawkish. This is the last
meeting of the year and they are just going to play safe.”

TECHNICAL OUTLOOK

Charts showed that the market had moved towards an
“overbought” territory and that some pull back was on the cards.
The FTSEurofirst 300’s relative strength index (RSI) was at 63,
not far from 70 and above, which is considered overbought.

But medium-term, the technical outlook was positive as
equities stayed in their broad uptrend channel and hovered above
their 50-day and 200-day moving averages and a 61.8 percent
Fibonacci retracement of a fall from April to May.

Investors will keep an eye on macroeconomic numbers, with
U.S. November retail sales figures due at 1330 GMT, November
producer prices data also at 1330 GMT and October business
inventories numbers at 1500 GMT.

Among individual stocks, Whitbread (WTB.L: ) fell 3.1 percent
after Panmure Gordon downgraded it to “hold” from “buy”, saying
it does not expect consensus expectations to be raised, even
though the company reported strong profit growth this
year.[ID:nLDE6BD0JE] [ID:nLDE6BC13T]

TUI AG (TUIGn.DE: ), owner of Europe’s largest tour operator
TUI Travel (TT.L: ), rose 3.6 percent after it said it expected a
positive result for the current fiscal year. [ID:nLDE6BC1BL]

Across Europe, Britain’s FTSE 100 (.FTSE: ) index was up 0.1
percent, while both Germany’s DAX (.GDAXI: ) and France’s CAC 40
(.FCHI: ) were down 0.1 percent.

“There has been a little bit of a pull back in the markets.
Investors are cautious ahead of the Fed,” Philip Isherwood,
European equities strategist at Evolution Securities, said.
(Additional reporting by Joanne Frearson)

European shares ease from highs ahead of Fed