* FTSEurofirst 300 down 0.02 pct, Euro STOXX 50 up 0.04 pct
* Miners retreat along with metal prices on China worries
* Euro zone equities still relatively cheap -SG's Kaloyan
* Aerospace stocks hurt by Dreamliner's woes
* Sell any rally in volatility indexes -Deutsche Bank
By Blaise Robinson
PARIS, Jan 16 European shares ended flat on
Wednesday, bouncing off intraday lows as many investors used the
dip to boost their exposure to equities, although mining shares
fell along with metal prices on worries about China.
Rio Tinto lost 0.9 percent, Vedanta Resources
dropped 1.4 percent and Xstrata shed 3.4
The FTSEurofirst 300 index of top European shares
unofficially closed 0.02 percent lower at 1,159.95 points, after
losing as much as 0.5 percent earlier in the session.
The benchmark index, which is already up 2.3 percent so far
this year and has hit a near-two-month high earlier this month,
has surged 8.8 percent since mid-November as fading fears of a
break-up of the euro zone prompted investors to scoop up the
The euro zone's blue chip Euro STOXX 50 index
ended 0.04 percent higher at 2,702.54 points. The index has
jumped 32 percent since early June, led by banking shares such
as Credit Agricole, Mediobanca, which have
more than doubled.
"Europe's catch-up rally is set to continue," said Roland
Kaloyan, a strategist in global asset allocation at Societe
"There is no reason to switch out now. Markets are flooded
with liquidity, low volatility levels are supporting inflows,
and valuations are still attractive."
Despite the recovery rally started in mid-2012, euro zone
assets continue to trade at a significant discount relative to
U.S. assets, Kaloyan said.
"In terms of price-to-book value, euro zone equities are
trading at a 47 percent discount relative to U.S. equities...
The Euro STOXX 50 should trade at around 3300 points, or about
25 percent higher than current levels, to normalise its relative
Around Europe, UK's FTSE 100 index dipped 0.2
percent on Wednesday, Germany's DAX index gained 0.2
percent, and France's CAC 40 added 0.3 percent.
Shares in European suppliers for Boeing's 787
Dreamliner passenger jets fell as Japan's two leading airlines
grounded their fleets of 787s after one had to make an emergency
landing, the latest in a series of incidents highlighting safety
concerns over the Dreamliner.
Finmeccanica dropped 0.5 percent, Zodiac Aerospace
lost 0.5 percent, MTU Aero Engines fell 0.7
percent and Thales slipped 0.6 percent.
Shares in Boeing were down 2.6 percent on Wall
Street, while Airbus parent EADS, Boeing's arch rival,
gained 0.9 percent.
The recent sharp rise in investor appetite for equities has
also been reflected in the Euro STOXX 50 Volatility Index
, or VSTOXX, Europe's widely used measure of stock market
The VSTOXX - which is used to measure the cost of protecting
stock holdings against corrections - has tumbled 35 percent
since mid-November to around 16, and Deutsche Bank derivatives
strategists see it remaining low in 2013, mostly due to the
massive liquidity provided by central banks.
"For H1 (first half of 2013) at least, any volatility spikes
are likely to be more subdued, and so volatility selling
strategies should be considered after any 'mini' spikes in the
coming months," they wrote in a note.