* FTSEurofirst 300 falls 0.8 pct to 2-week closing low
* Investors cautious; details of likely Fed easing unclear
* Miners among heaviest fallers as metals prices slip
By Atul Prakash
LONDON, Oct 27 (Reuters) - European shares hit a two-week
closing low on Wednesday, with investors becoming cautious after
discouraging U.S. data and on doubts over the extent of a likely
stimulus by the Federal Reserve at its meeting next week.
Appetite for risky assets fell, with the VDAX-NEW volatility
index <.V1XI> rising to a three-week high. The higher the index,
based on sell and buy options on Frankfurt's top 30 stocks
<0#.GDAXI>, the lower the market's desire to take risk.
The FTSEurofirst 300 <> index of top European shares
finished 0.8 percent down at 1,081.52 points, the lowest close
since Oct. 12. It is up just 3.4 percent this year.
Investors were cautious ahead of the Fed meeting. Some
analysts said it was expected to take a measured approach and
might not announce extensive stimulus measures because the
central bank itself was not certain how much support was needed
to boost the economy.
"The tailwind for equity markets will be reduced in the
run-up to the Fed's decision, but I would not expect it to prove
disruptive because the Fed will keep alive the expectations of
more (stimulus)," Klaus Wiener, head of research at Generali
Investments in Cologne, said.
"The market will stay nervous until we know what the Fed
will do. When it comes out with a decision, there could be one
or two days of disappointment, but towards the year-end there is
still room for equities to creep higher."
The Wall Street Journal reported the central bank is likely
next week to unveil a programme of purchases worth a few hundred
billion dollars over several months, and wants to avoid a "shock
and awe" approach. []
Speculation that fresh monetary easing in the United States
would not be as pronounced as previously thought supported the
dollar, which in turn made metals expensive for the holders of
other currencies and dragged down prices of key base metals.
Miners topped the decliners list, with the STOXX Europe 600
basic resources index <.SXPP> falling 2.1 percent. BHP Billiton
<BLT.L>, Anglo American <AAL.L>, Rio Tinto <RIO.L>, Xstrata
<XTA.L> and ENRC <ENRC.L> fell 1.5 to 3.8 percent.
DATA DRAGS, CHARTS BULLISH
Economic data also hurt sentiment, with figures showing
demand for long-lasting U.S. manufactured goods, excluding
aircraft, unexpectedly slipped last month.
A key gauge of business capital spending plans also fell,
underscoring the economic recovery's tepid pace. []
Charts, however, showed a positive technical outlook. The
Euro STOXX 50 <>, the euro zone's blue-chip index, sent
a bullish signal as its 50-day moving average crossed above its
200-day moving average, known as a golden cross.
That upward momentum indicator last occurred in June 2009,
and the index rose more than 20 percent in the next four months.
The index fell 0.9 percent to 2,829.42 points on Wednesday.
"The price action for the index since a bottom in May has
confirmed to an almost textbook definition of a market that is
rallying, with the succession of higher tops and higher
bottoms," said Bill McNamara, analyst at Charles Stanley.
"There is very little in this chart that suggests it's about
to go into reverse," he said, adding the index could find
support at 2,790 and may face resistance at 2,890 points.
Banking shares were broadly lower, but earnings helped some
companies. Nordea <NDA.ST> rose 2.4 percent after posting
third-quarter earnings above all forecasts, and Deutsche Bank AG
<DBKGn.DE> gained 1 percent after reporting resilient profit
from investment banking in the third quarter. []
The FTSE 100 <>, Germany's DAX <> and France's
CAC 40 <> fell 0.7 to 1.1 percent.
Portugal's PSI20 <> index fell 1.3 percent as the
opposition Social Democrats and minority Socialist government
ended crucial talks on the 2011 budget without agreement.
(Editing by David Hulmes)
