* 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
By Alistair Smout
LONDON, Dec 18 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