European shares extend gains after German data, before Fed
* FTSEurofirst 300 up 0.9 percent
* German DAX receives Ifo sentiment boost
* Volumes likely to be thin as investors await Fed decision
* Energy services fall after Technip profit warning
LONDON, Dec 18 (Reuters) - European shares rebounded on Wednesday from the previous session's declines, buoyed by German data that showed growing optimism about the economy.
Volumes were expected to be light, however. Investors were wary of being too committed before the U.S. Federal Reserve announced later on Wednesday whether it would begin to taper down its monetary stimulus this month.
The pan-European FTSEurofirst 300 extended gains, led by a rise on the German DAX, after the think tank Ifo reported that German business morale hit its highest level since April 2012 in December.
The Ifo report was in line with expectations, but it was another signal that growth in Europe's largest economy may accelerate next year. It helped to confirm the ZEW gauge of German analyst and investor sentiment, which surged far more than forecast on Tuesday.
"Optimism on the future is certainly seeing an improvement with the climate index pushing to a twenty-month high," said Brenda Kelly, the chief market strategist at IG. "Likely we will see a better growth picture from Germany on the back of this, as much as 0.5 percent in the first quarter of 2014."
The FTSEurofirst 300 was up 0.9 percent at 1,259.16 at 1100 GMT after falling 0.8 percent in the previous session. It is up 1.3 percent on the week.
Electrolux rose 5 percent, one of the top risers in Europe, boosted by strong U.S. deliveries data and an upgrade to "buy" from UBS.
While Electrolux benefitted from a stronger growth outlook, especially in the Unites States, the recent pick-up in economic activity, combined with an agreement on the U.S. government budget, has raised the possibility that the Fed will slow its asset purchases after European markets close on Wednesday.
The increasing chance of a slowdown in stimulus has seen the FTSEurofirst 300 decline in December for the first time in five years. It is now down 3.5 percent on the month.
However, traders said while the chances the Fed will slow its asset purchases are now baked into prices, a change in policy was still unlikely. The consensus remains that the central bank will not act this year, meaning that investors would not want to be caught short ahead of the decision.
"The general view is that for most part people aren't expecting the Fed to taper, but I doubt we'll get too big a move ahead of it," said Nick Xanders, who heads up European equity strategy at BTIG. Sentiment would support slight gains in stocks until the meeting, he said.
"Everyone was long going in to December 1, hoping for a Christmas rally, and got caught out. You've got a few people cutting their positions now, but I think for the most part people are still more positive than negative."
Weighing on the index were energy services firms, led by Technip, down 6.9 percent after issuing a profit warning, the latest in a string of poor updates from the sector.
The news hit other oil and gas services firms, such as Subsea, down 2.9 percent, Petrofac and Saipem .
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