London: European shares pared gains in early trade on Thursday in a choppy session, with volumes expected to be light throughout the day as the US markets are closed for the Thanksgiving holiday.
Although the market was being supported by technicals after a five-day losing run, investors were likely to be cautious with the ongoing euro zone sovereign debt crisis.
At 2:02pm, the FTSEurofirst 300 index of top European shares was up 0.4% at 905.92 points after rising to a high of 909.41 earlier in the session.
Shares rose at opening after losing 7% in five sessions, with technicals prompting investors to buy stocks, although the uptrend is seen temporary on growing concerns that the euro zone debt crisis could spread to more countries.
At 1:34pm, the FTSEurofirst 300 index of top European shares was up 0.6% at 907.49 points after hitting a seven-week low in the previous session as a “disastrous” German bond sale fuelled fears the region’s debt crisis was beginning to threaten even Europe’s biggest economy.
“A touch of bargain hunting is creeping in as we had several successive days of declines. But a lot of people are still cautious with regards to the uptick and it could prove rather temporary as the backdrop is still difficult,” Keith Bowman, equity analyst at Hargreaves Lansdown, said.
“Events in Europe are still dominating and the German bond auction yesterday just added another level of caution.”
The euro zone’s blue-chip Euro STOXX 50 index, which tumbled 11% over the past eight sessions, was up 1.1%. The index had slipped into an “oversold” territory, with its nine-day relative strength indexes (RSI) hitting 30.
Banks, which fell in the previous eight sessions, were up 1.3%. The Index’s 14-day RSI was at around 33. A level of 30 and below is considered “oversold” while 70 and above is considered “overbought”.