European shares gain as technical traders bet on new bounce

Last Updated: Fri, May 24, 2013 07:20 hrs

LONDON, May 24 (Reuters) - European shares edged up on Friday, staging a small technical bounce after their biggest one-day fall in nearly a year.

The pan-European FTSEurofirst 300 index was up 0.3 percent at 1,233.38 points while the euro zone blue-chip Euro STOXX 50 was up 0.5 percent at 2,790.65 at 0706 GMT after both indexes closed down 2.1 percent on Thursday.

Investors were spooked by speculation that the U.S. Federal Reserve could roll back its hefty asset-purchase programme, which had helped the Euro STOXX 50 rally 11.5 percent in just over a month.

But the Euro STOXX 50 bounced off a technical support in the 2,750 area, corresponding to its March's high, on Thursday, leading traders to bet there was still buying momentum and the recent uptrend could resume.

"The drop yesterday was a bit scary," Valerie Gastaldy, head of technical analysis firm Day-By-Day, said. "But my advice to clients is that we shouldn't panic and we should try to buy."

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