* FTSEurofirst 300 down 0.4 pct, Euro STOXX 50 falls 0.2 pct
* DAX falls 0.6 pct, hit by drop in German retail sales
* ThyssenKrupp falls after UBS downgrade
* Most traders see no abrupt scaling back of Fed's stimulus
By Sudip Kar-Gupta
LONDON, July 31 (Reuters) - European shares edged lower on
Wednesday as a fall in German retail sales dented sentiment,
while investors were reluctant to add big equity positions
ahead of a U.S. Federal Reserve policy announcement later in the
The pan-European FTSEurofirst 300 index was down
0.4 percent at 1,201.69 points in early session trade, while the
euro zone's blue-chip Euro STOXX 50 index also fell
0.2 percent to 2,753.62 points.
Germany's DAX fell 0.6 percent to 8,234.69 points
after data showed German retail sales fell 1.5 percent on the
month in June, their biggest drop this year.
Hendrik Klein, head of high-frequency trading and asset
management firm Da Vinci Invest AG, said the index could fall to
8,000 points. "The market rally is losing steam," he said.
Others said likely fluctuations in the economic data the Fed
watches most closely could help support equities.
"This is likely to discourage the Federal Open Market
Committee from exiting its quantitative easing programme too
early," Central Markets chief strategist Richard Perry said.
"Therefore, expect stock markets to continue to push higher for
THYSSEN KRUPP FALLS
Germany's DAX is up around 8 percent since the start of 2013
after rising 29 percent in 2012, but has shown signs of weakness
in recent sessions, hit by profit warnings from engineer Siemens
and chemicals group BASF last week.
Another German stock was among the worst performers on the
FTSEurofirst 300 on Wednesday, with steelmaker ThyssenKrupp
hit by a UBS downgrade.
On Wednesday, French bank BNP Paribas posted a
smaller-than-expected drop in profits while German drugmaker
Bayer warned its full-year profit target had become
more challenging to meet.
According to Thomson Reuters StarMine data, 58 percent of
the companies on the pan-European STOXX 600 index have
beaten or met market forecasts with their second quarter
earnings, while 42 percent of companies have missed forecasts.
Expectations the Fed will scale back stimulus that helped
drive the global equity rally have pushed the FTSEurofirst 300
index from a five-year high of 1,258.09 points hit in late May.
The index remains up 6 percent since the start of 2013 and
Andreas Clenow, hedge fund trader and principal of ACIES Asset
Management, expected a slow rise over the rest of the year.