European shares close lower on Greek worries

LONDON (Reuters) - European shares dipped on Monday as short-term investors cashed in on recent gains, after worries grew about a messy Greek default, with political leaders in the country still yet to accept the terms of a second bailout.

The FTSEurofirst 300 index .FTEU3, however, managed to close above a resistance level for the second consecutive session, which demonstrated how strong the momentum of last week's rally driven by positive U.S. economic data had been.

"We are seeing short-term clients selling following the run higher, we need certainty on Greece for the rally to be sustained," said Angus Campbell, head of sales at Capital Spreads.

"But unless Greece has a messy default the momentum from last week is not going to be reversed in one-day. We could see it push up a few more percent if there is a positive outcome on Greece, but there are still lots of threats to the market."

The FTSEurofirst 300 .FTEU3 index of top European shares provisionally closed down 0.2 percent at 1,074.45 points, but above its 61.8 percent Fibonacci retracement at 1,062.24 from its February 2011 high to its September 2011 low.

Glencore (GLEN.L) featured among the worst performers, down 4.5 percent, after brokers said the commodities trader could pay a hefty premium in its proposed merger with Xstrata.

(Reporting by Joanne Frearson)