There is a tutorial here on how to do this in photoshop:

I am trying t
I would use a radial-gradient to a pseudo-element instead of a box-shadow since it tapers off towards the edges nicer.
Position the radial-gradient above the so that it's cut in half. Then position another psuedo-element just below the with a the same color as the background and height just large enough to cover the rest of the gradient.
Updated JSFiddle
CSS
hr.fancy-line {
border: 0;
height: 1px;
}
hr.fancy-line:before {
top: -0.5em;
height: 1em;
}
hr.fancy-line:after {
content:'';
height: 0.5em;
top: 1px;
}
hr.fancy-line:before, hr.fancy-line:after {
content: '';
position: absolute;
width: 100%;
}
hr.fancy-line, hr.fancy-line:before {
background: radial-gradient(ellipse at center, rgba(0,0,0,0.1) 0%,rgba(0,0,0,0) 75%);
}
body, hr.fancy-line:after {
background: #f4f4f4;
}