European shares edge lower, RSA Insurance slumps

Friday, 13 Dec 2013 | 3:17 AM ET

LONDON, Dec 13 (Reuters) - European shares hit fresh two-month lows on Friday on concerns the U.S. Federal Reserve may start trimming its stimulus from next week, but analysts said further losses may be limited by strong technical support levels.

However, RSA Insurance slumped 17 percent as its Chief Executive Simon Lee resigned after the insurer warned of a fall in 2013 earnings and flagged a possible hit to the dividend from a capital hole at its Irish business.

PSA Peugeot Citroen fell 9.8 percent after General Motors announced the sale of its entire 7 percent stake in the French carmaker. Peugeot said on Thursday it took a 1.1 billion euro ($1.52 billion) writedown at its ailing overseas operations.

The FTSEurofirst 300 was down 0.1 percent, touching fresh two-month lows.

The euro zone's blue-chip Euro STOXX 50 index was down 0.04 percent at 2,926.89 points by 0804 GMT after falling 0.7 percent on Thursday. It found support at its 100-day moving average of 2,926.12, while its relative strength index (RSI) dropped to 33, approaching "oversold" levels.

"The Euro STOXX 50 is now testing its 100-day moving average and it is possible that this will provide support, as it did as recently as August. The recent sell-off has left it looking short-term oversold, but not to the extent that a bounce has become inevitable," Bill McNamara, technical analyst at Charles Stanley, said.

"I would be surprised if traders committed themselves to additional long positions at this point, just a few days ahead of the Fed meeting. I wouldn't be surprised to see the index drift back to 2,900 before the buyers were tempted back in."

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