LONDON European shares managed small gains on Monday, in choppy trade, as investors took some encouragement from robust Chinese economic data but remained concerned over the euro zone and the looming "fiscal cliff" budget battle faced by U.S. politicians.
The FTSEurofirst 300 .FTEU3 was up 0.1 percent at 1,097.95 by 1208 GMT, steadying after last week's 1.6 percent drop.
Although Greece approved a tough 2013 budget over the weekend, euro zone finance ministers are not now expected to release a new loan tranche to the country on Monday as there is no agreement yet on how to make its debt sustainable.
But investors took heart from numbers out of China showing export growth climbed to a five-month high above 11 percent, beating expectations and adding to recent data suggesting the country's seven straight quarters of slowing growth have ended.
But U.S. president Barack Obama's election win has left the market to focus on the U.S. fiscal cliff - the $600 billion of automatic spending cuts and tax hikes which are set to take effect at the start of 2013 if politicians cannot agree to compromise on the federal budget before then.
"There are still some big macro issues out there ... but we continue to believe in the long-term positive fundamentals revolving around equity markets," said Henk Potts, market strategist at Barclays.
He perceives the fiscal cliff as a "headwind rather than a reversal of the U.S. economy", and that while Greece has also recently come into focus, it is no longer at the heart of the sovereign debt crisis.
Among the risers, Telecom Italia (TLIT.MI) rose to the top of the FTSEurofirst 300 leader board, up 5.7 percent in robust volume, after Egyptian businessman Naguib Sawiris offered to buy a stake in Italy's largest telecoms company.
Both the Wall Street Journal and Italy's Corriere della Sera newspaper said Sawiris was prepared to invest up to 5 billion euros ($6.4 billion) in the company.
Trading volume in Telecom Italia stood at 230 percent of its 90-day daily average, against the FTSEurofirst 300 on just 37 percent.
Elsewhere, French advertising group Publicis (PUBP.PA) added 2.8 percent after saying demand for advertising rebounded in October. London-listed peer WPP (WPP.L) was boosted by the news, climbing 1.2 percent.
Aerospace group Cobham (COB.L) was a big faller in London, off 7.7 percent, after the company warned its 2013 sales were set to fall due to growing pressure on U.S. defense budgets.
Third-quarter results overall have proved mixed, with 43 percent of European companies missing earnings expectations so far, according to Thomson Reuters Starmine data.
"If this continues it could well mean that the highs for equities for this year are in and the usual year-end rally won't happen in 2012," said Lex van Dam, hedge fund manager at Hampstead Capital, which manages around $500 million of assets. ($1=0.7868 euros)
(Editing by Greg Mahlich)