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European shares edge lower as Fed curbs stimulus bets

Thursday, 31 Oct 2013 | 4:06 AM ET

LONDON, Oct 31 (Reuters) - European stocks edged lower on Thursday after the U.S. Federal Reserve took a more hawkish tone than the market had anticipated, raising the chances that stimulus may be scaled back earlier than previously expected.

The Fed kept its $85 billion-a-month stimulus plan as the market widely expected, but did not sound as alarmed about the state of the economy than some had anticipated, removing a reference to tighter financial conditions.

U.S. stocks sold off slightly after the announcement, which was seen as increasing the odds that the Fed will start reducing its equity-friendly asset purchase programme earlier than March, the consensus expectation before the Fed's meeting.

"We're going to see traders ... take profit," said Farhan Ahmad, a trader at Tradenext, adding he would need to see a 10 percent drop in major indexes before becoming a buyer again.

"The economic data from the U.S. and from Europe says (the economy) is still licking its wounds, so I would like to see a bigger drop than most people expect."

At 0801 GMT, the pan-European FTSEurofirst 300 index was down 0.3 percent at 1,284.37 points, further retreating from a five-year high hit the previous day.

Corporate results added to the negative market tone as heavyweight stocks such as oil major Royal Dutch Shell and L'Oreal missed consensus forecasts.