* FTSEurofirst 300 up 0.3 pct, Euro STOXX 50 up 0.7 pct
* Traders say Cypriot crisis too small to derail rally
* Charts show trend remains up - Trading Central
By Francesco Canepa
LONDON, March 20 European shares broke a
three-day losing streak on Wednesday as investors bet a funding
crisis in Cyprus would not spread to the rest of the euro zone
and continued monetary support would sustain shares.
The European Central Bank allayed the risk of an immediate
collapse of Cypriot banks by providing liquidity, albeit within
certain limits, helping to backstop sentiment.
Cyprus was also pleading with Russia for help after the
island's parliament rejected a levy on bank deposits that was
one of the conditions for a 10 billion euro European Union
Traders said the limited size of Cyprus's cash requirements
meant it was likely there could be a compromise with
international lenders, averting a spillover effect to other euro
"My advice right now, when you're intra-day trading, is 'buy
the lows'," Steve Ruffley, market strategist at spreadbetting
"It's a dangerous game but right now I don't see the
underlying fears in the market."
The pan-European FTSEurofirst 300 index was up 3.9
points, 0.3 percent, at 1,198.81 points at 1050 GMT after
falling 13.8 points in the previous three days.
The index was less than 1 percent away from a 5-year high
hit on Thursday and was on track to record its 10th consecutive
monthly gain in March, in a rally largely fuelled by bond-buying
programmes unveiled by the U.S. Federal Reserve and the European
The Fed was expected to signal plans to keep its stimulus
programme open on Wednesday, partly in the light of renewed euro
zone concerns, and traders cited continued monetary support as
the main reason investors were still prepared to buy into
"A lot of the investors that had missed out on the rally at
the beginning of the year had been waiting for a little bit of a
pullback," Mouhammed Choukeir, chief investment officer at
Kleinwort Benson, said.
"We had (it) and that's one of the reasons why they're
putting risk back on."
European banks rose 0.5 percent after being among
the worst hit earlier this week.
But Choukeir warned the market may be complacent in assuming
that a rescue deal for Cyprus would be struck, adding a run on
Cypriot banks was likely when they are allowed to reopen.
Ronnie Chopra, a market strategist at TradeNext, also
cautioned that sentiment could turn quickly if news coming out
of Cyprus suggested that the island was moving closer to a
He said if the euro fell back to a four-month low of
around $1.28, that would be a short-term sell signal for shares.
The single currency rose 0.3 percent to $1.29 at 1050 GMT,
helping the euro zone blue-chip Euro STOXX50 index,
to which it is highly correlated, rise 0.7 percent to 2,688.78
Nicolas Suiffet, a technical analyst at Trading Central in
Paris, said this could be the right time to buy the index.
"The index has entered into a consolidation phase below (its
recent peak) at 2,750 but remains supported by a rising trend
line drawn from June's bottom and is now challenging the rising
20-day and 50-day simple moving averages," Suiffet said.
"The support at 2,660 (Tuesday's low) is likely to contain
any downward move in price."
He added momentum indicators were also supportive and a
rebound was likely from these levels, barring a break
below 2,547, the lower end of a bullish gap opened in November.