European shares steady, RSA Insurance slumps

Mon Nov 11, 2013 4:05am EST

* FTSEurofirst 300 flat

* RSA plunges on news of Irish unit's probe

* Robust U.S. payrolls puts Fed stimulus outlook in focus

By Tricia Wright

LONDON, Nov 11 (Reuters) - European shares steadied on Monday, with RSA Insurance dropping on news of a probe into its Irish unit, as investors pored over Friday's strong U.S. jobs data to see how it might impact the outlook for the Fed's monetary stimulus.

RSA Insurance dropped 13 percent to a 17-month low after it suspended the Irish unit's chief executive, chief financial officer and claims director over "issues in the Irish claims and finance functions" found in an audit.

"The words 'reserving issues' and 'claims issues' strike fear into the hearts of management, investors and regulators of insurance companies - and not without good reason," said Eamonn Flanagan of Shore Capital Stockbrokers.

"Mercifully, although extremely damaging for the group's reputation and credibility in Ireland, these issues are unlikely to topple the group."

The FTSEurofirst 300 was down 0.30 points at 1,294.87 points by 0846 GMT. The index hit a new five-year high of 1,316 last week, and is up around 16 percent from June.

Investors were scrutinising U.S. October non-farm payrolls figures, released on Friday, for clues as to when the U.S. Federal Reserve will start to reduce the $85 billion-a-month bond-buying programme which has underpinned equity markets.

U.S. employers took on 204,000 new employees last month, almost twice the number forecast by analysts, with some taking the view that this could bring forward the timeline for when the Fed starts to scale back its stimulus.

However, some analysts highlighted downbeat elements to the data, with the employment report also showing a surprisingly large number of Americans dropping out of the labour force. [ID:

"You would have thought such a strong number would possibly be enough to get people worried about tapering ... but the detail in the data wasn't quite as encouraging, particularly the participation rate," said Ian Williams, equity strategist at Peel Hunt.

"I think there are enough question marks in there to slightly calm people who were worried about stimulus being removed too early."

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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