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European shares fall; CGG tumbles 14 pct

Blaise Robinson
Tuesday, 17 Dec 2013 | 4:10 AM ET

* FTSEurofirst 300 down 0.4 pct, Euro STOXX 50 down 0.7 pct

* CGG's profit warning sparks sell-off in oil services

* All eyes on U.S. Federal Reserve's policy meeting

PARIS, Dec 17 (Reuters) - European shares fell on Tuesday, trimming some of the previous session's gains as investors were on edge ahead of a Federal Reserve policy meeting at which the central bank could decide to start trimming its stimulus.

At 0842 GMT, the FTSEurofirst 300 index of top European shares was down 0.4 percent at 1,252.92 points.

The odds still point to no major policy change at this week's Fed meeting. However, recent robust U.S. economic data, combined with last week's breakthrough budget deal in Washington, has sparked some speculation that the U.S. central bank could announce a reduction to its $85-billion a month in bond purchases following its two-day meeting on Wednesday.

The data has triggered a bout of profit taking on stocks, which have strongly benefited from the Fed's massive liquidity injection. The FTSEurofirst 300, which was up 15 percent on the year at the end of November, has dropped about 4.2 percent since then.

The benchmark index gained 1.3 percent on Monday in what traders described as a short-covering rally following the sharp two-week slide.

Around Europe, the UK's FTSE 100 index was down 0.5 percent, Germany's DAX index was down 0.4 percent and France's CAC 40 was 0.9 percent lower. The euro zone's blue-chip Euro STOXX 50 index was down 0.7 percent, at 2,956.92 points.

"As long as indexes don't retrace at least 50 percent of the December pull-back, which would mean crossing above 3,005 points for the Euro STOXX 50, it's just a technical rebound and not the restart of the rally," Aurel BGC chartist Gerard Sagnier said.

"We're cautious at this point, although we could see the rally resume sometime in early 2014."

CGG was among the biggest losers in Europe in early trade, sinking 14 percent in massive volumes after the French oil industry seismic surveying firm slashed its profit target.

CGG's profit warning had a ripple effect in the oil services sector, with Technip down 2.9 percent and Saipem sliding 1.5 percent.

"The oil services sector is in a tough spot, with very low visibility on capital expenditures from the big oil companies, which are not sure where oil prices are going," said Bertrand Lamielle, head of asset management at B*Capital.