LONDON, Sept 13 (Reuters) - European shares dipped in early trade on Thursday, edging back further from the 14-month high hit in the previous session, with potential action from the U.S. Federal Reserve later in the session needed to provide further support to prices.
The FTSEurofirst 300 was down 0.1 percent at 1,106.45 by 0709 GMT, after gaining 0.1 percent on Wednesday having at one stage hit its highest levels since early July 2011 after a top German court gave the green light for Europe's new bailout fund.
However, with the European Stability Mechanism ratified, the initial rally which followed the news waned as investors' attention shifted to the Fed's policy decision.
"Markets are probably getting too overexcited by all the positive developments, and certainly once some kind of disappointment shows up, they could react with a bit of a short retrenchment because they are to some degree overbought," said Gerhard Schwarz, head of equity strategy at Baader Bank.
The odds among economists polled by Reuters on a third round of bond buying from the Fed rose to 65 percent in August from 60 percent previously. Of the 51 who put the chances of QE3 at more than 50 percent, 39 predicted the Fed would act on Thursday following its two-day policy meeting.