* FTSEurofirst 300 closes roughly flat at 1,137.60 points
* Euro STOXX 50 rises 0.4 pct to 2,659.95 points
* U.S. "fiscal cliff" worries push shares off intraday highs
* Most traders positive, expect eventual "fiscal cliff" deal
By Sudip Kar-Gupta
LONDON, Dec 27 Fresh concerns that the United
States may fail to reach a deal to avoid growth-sapping fiscal
measures weighed on European shares on Thursday, although most
traders still felt an agreement would be reached.
The pan-European FTSEurofirst 300 index closed
broadly flat at 1,137.60 points, although the euro zone's
blue-chip Euro STOXX 50 index edged up by 0.4
percent to 2,659.95 points.
Traders remained focused on progress by U.S. politicians to
avoid a "fiscal cliff" - a combination of government spending
cuts and tax rises due to take effect early next year which
could hit the U.S. economy.
The FTSEurofirst 300 fell from an intraday high of 1,141.79
points after U.S. Senate Majority Leader Harry Reid warned the
country could go over the edge of the "cliff".
However, most traders still felt an agreement would be
struck, expecting that even if a deal was not reached by the end
of December, politicians would form one in January that would
avoid causing any undue damage to the U.S. economy.
"Clients are a little bit nervous. We may get a further
pullback going forward but the general outlook is still
positive. The general expectation is that when push comes to
shove, they'll reach an agreement," said Giles Watts, head of
dealing at City Index.
SOLID GAINS IN 2012
Along with worries over the U.S. budget situation, some
concerns remain over the euro zone's sovereign debt crisis,
which resulted in a bailout of Greece and has hit the region's
This was highlighted on Thursday by a 19.5 percent fall at
nationalised Spanish bank Bankia, after the bank's
rescue fund gave a negative valuation on the company.
However, pledges from the European Central Bank (ECB) to
take new steps to help debt-ridden countries such as Spain and
Italy have enabled European stock markets to rise over the
course of the second-half of the year.
The FTSEurofirst 300 has risen around 14 percent since the
start of 2012 and remains close to a 19-month high of 1,144.15
points reached last week. The Euro STOXX 50 has gained 15
percent, while Germany's DAX equity index has risen
nearly 30 percent.
Caroline Vincent, European equities fund manager at
Cavendish Asset Management, felt European shares would continue
to rise in January and added she expected U.S. politicians to
reach a deal over the "fiscal cliff".
"I'm not unduly concerned by the 'fiscal cliff'. I believe
that they will come to some form of an agreement," said Vincent.
"I believe that this upward movement of the market will
continue into January," she added.