* FTSEurofirst 300 flat, Euro STOXX 50 down 0.2 pct
* Anaemic trading volumes for last few sessions of 2012
* Charts show indexes in 'overbought' territory
* Frankfurt market closing early on Friday
By Blaise Robinson
PARIS, Dec 28 European shares were steady in
early trade on Friday as investors waited to see if a deal to
avoid the U.S. "fiscal cliff" would be reached before further
boosting their exposure to equities.
At 0918 GMT, the FTSEurofirst 300 index of top
European shares was flat at 1,137.55 points, hovering a few
points below a 19-month high of 1,144.15 hit last week.
The euro zone's blue chip Euro STOXX 50 index
was down 0.2 percent at 2,653.68 points.
Resource-related shares gained ground, with Rio Tinto
up 0.5 percent and Anglo American up 0.3
percent, boosted by recent data showing signs that top consumer
China's economy is improving.
With just a few days left before the deadline, U.S.
President Barack Obama and congressional leaders from both
parties will meet at the White House on Friday at 2000 GMT, in a
last ditch effort to reach an agreement and avoid massive tax
hikes and spending cuts which could drag the economy into
"Stocks have been quite resilient despite the delays in
negotiations, which is a positive sign," Saxo Banque senior
sales trader Alexandre Baradez said.
"The rally could continue next month, and if we get a
pull-back, it will be seen as a buying opportunity."
Investors will also keep an eye on Italy's debt auction on
Friday, with the country set to offer up to 3 billion euros of
five-year bonds and the same amount of 10-year paper in the
first sale of longer-term debt to be settled in
Analysts expect the auction, the last to be held this year,
to sail through after Rome had no trouble placing 11.75 billion
euros of short-dated paper on Thursday, helped by debt
FISCAL CLIFF DEAL EXPECTED
The FTSEurofirst 300 is set to post a gain of 14 percent for
2012 while the euro zone's blue chip Euro STOXX 50
index has risen 15 percent, both indexes enjoying their best
annual performance since the sharp bounce of 2009, a rally
fuelled in part by expectations of a deal to avoid the so-called
U.S. fiscal cliff.
"The information we get from Washington is contradictory,
one day it's positive and the following day it's negative. But
somehow, traders believe that there will be some kind of deal to
avoid falling off the cliff," a Paris-based trader said.
Around Europe, UK's FTSE 100 index was up 0.02
percent, Germany's DAX index down 0.09 percent, and
France's CAC 40 down 0.34 percent.
Frankfurt stock market will close early on Friday afternoon.
Charts show a sharp rally since mid-November has pushed the
two benchmark indexes deep into 'overbought' territory, with the
Euro STOXX 50 reaching an 'overbought' level not seen in six
years, fuelling expectations of a pull-back early next year.
The Euro STOXX 50's 14-day relative strength index (RSI) - a
widely-used technical momentum indicator - hit 72 last week,
with 70 and above considered as 'overbought'. The last time the
index's RSI reached such a level was in 2006.
While the index continued to rise this week - hitting a
17-month high on Thursday - this week's RSI peak is showing a
declining trend, a technical divergence which signals that the
market is ripe for a correction.
Despite the sharp rally of the past few weeks, trading
volumes for euro zone indexes are down by a about third compared
with 2011 levels, with December on track to be the quietest
month in six years, according to Thomson Reuters Eikon data.