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Europe shares end broadly steady, off day's lows

Source : REUTERS
Last Updated: Thu, Jun 13, 2013 16:30 hrs

* FTSEurofirst 300 down 0.07 pct, Euro STOXX 50 down 0.2 pct

* Both indexes bounce off major support levels

* Time to cash in gains on put options -UBP's Kalfon

By Blaise Robinson

PARIS, June 13 (Reuters) - European shares ended broadly steady on Thursday, recovering from the session's lows after upbeat U.S. retail sales and a drop in jobless claims prompted bargain hunters to pick up battered mining and banking stocks.

The better-than-expected U.S. data fuelled expectations the economy is shaking off a soft patch seen in the past few weeks, eclipsing recent worries the Federal Reserve could soon start to scale back its stimulus measures.

"We think the Fed will start to trim the amount of bonds it buys around the third quarter, but it shouldn't spark a sell-off in equities because the Fed's move will in fact confirm that the U.S. economy is in a better shape," said Benoit Peloille, equity strategist at Natixis, in Paris.

The FTSEurofirst 300 index of top European shares closed 0.07 percent at 1,173.98 points, while the euro zone's blue-chip Euro STOXX 50 index ended 0.18 percent lower at 2,661.71 points.

The two indexes had fallen as much as 1.7 percent and 1.9 percent respectively earlier in the session, with both testing major support levels representing 200-day moving averages, before bouncing back, sending a positive technical signal.

"Volatility should stay high until next week's Fed meeting, where they will probably try to calm down the market," said Bernard Kalfon, head of volatility strategy and risk management at Geneva-based Union Bancaire Privee, which has 83 billion Swiss Francs ($90.1 billion) in assets under management.

The Euro STOXX 50 Volatility Index, known as the VSTOXX, surged as much as 9.9 percent on Thursday to a 3-1/2 month high of 23.8, before losing steam to 22.11.

The VSTOXX, Europe's gauge of investor sentiment which is based on put and call options on Euro STOXX 50 stocks and is used to measure the cost of protecting stock holdings against market corrections, has soared 40 percent since mid-May.

"The volatility has risen quite a lot already in the past few weeks, and we've started to book profits on put options at these levels. I don't expect a serious drop in stocks... It remains the most attractive asset class," UBP's Kalfon said.

Around Europe, UK's FTSE 100 index gained 0.08 percent, Germany's DAX index fell 0.6 percent and France's CAC 40 inched 0.1 percent higher.

Among the day's top gainers were miner Rio Tinto, up 2.6 percent, French bank BNP Paribas, up 1.6 percent, and Italian lender UniCredit, up 2.5 percent.

Mining shares - by far the worst sector so far this year, down 21 percent - got a boost from news that China plans to scrap its decade-old iron ore import licensing system, a move that could lift the country's imports.




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