European shares rally ahead of Fed decision

* FTSEurofirst 300 up 0.9 pct, Euro STOXX 50 up 1.1 pct

* Some strategists reckon Fed will leave stimulus intact

* Robust German business morale data helps sentiment

* Endesa (Other OTC: ELEZF - news) boosted by dividend resumption

By Tricia Wright

LONDON, Dec 18 (Reuters) - European shares advanced on Wednesday, more than recouping the previous session's losses, as investors positioned themselves for a U.S. Federal Reserve decision on its monetary stimulus.

Shares have been weakening over the past two weeks on concern the Fed will begin scaling back its equity-friendly stimulus measures in December. But a majority of economists expect it to hold off until March, and strategists point out persistently low inflation could prevent a December taper.

"I think if it does not do anything, as I expect ... that the markets may take a positive cue from that and we will have some sort of end-of-year rally," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets.

Mic Mills, head of operations at TradeNext, reckons a decision not to taper now could trigger a knee-jerk rise of 1.6 percent on the euro zone's blue-chip Euro STOXX 50 to its 50-day moving average, now at 3,023.

The FTSEurofirst 300 closed up 0.9 percent at 1,259.06 points, albeit in light volume, with some investors reluctant to become too committed before hearing the Fed's intentions later in the day.

The Euro STOXX 50 rose 1.1 percent to 2,975.09 points.

Helping the mood, German business morale hit its highest level since April (Frankfurt: B2B.F - news) 2012 in December, the think tank Ifo reported. This was in line with expectations, but another sign that growth in Europe's largest economy may accelerate next year.

Endesa topped the FTSEurofirst 300 with a 7.1 percent advance. The Spanish power company said it would pay a dividend on this year's profit, which would give it one of the highest yields in Europe.

Volume on the stock stood at more than five times its full-day average for the past three months, against just over three quarters for the FTSEurofirst 300.

While the broader market enjoyed gains, UK retailers came under pressure. Broker's notes raised concerns about the strength of Christmas sales and highlighted Kantar data showing the country's "big four" supermarkets were losing market share to discount grocers.

The big three listed stores, Sainsbury (Frankfurt: SUY1.F - news) , Tesco (Frankfurt: TS3.F - news) , and Morrison were left nursing respective falls of 3.6 percent, 1.7 percent, and 1.4 percent. Some analysts said, however, the major supermarkets should be underpinned by an improving domestic economy in 2014.

"A rising tide of activity (could) lead to the return of volume growth which the industry hasn't had for approaching 3-1/2 years - and that volume growth will, I think, support margins," Clive Black, retail analyst at Shore Capital, said.