European shares fall as U.S. fiscal talks go to the wire

LONDON Fri Dec 28, 2012 11:34am EST

LONDON Dec 28 (Reuters) - European shares closed the last full trading session of 2012 lower as wavering expectations of a deal to prevent the U.S. stumbling over its "fiscal cliff" left overbought indexes vulnerable to profit taking.

The FTSEurofirst 300 provisionally closed down 6.60 points, or 0.6 percent, at 1,131.00 on Friday, while the Euro STOXX 50, whose 14-day relative strength index (RSI) - a widely-used technical momentum indicator - is in 'overbought' territory, fell 1.2 percent.

With markets in Austria, Denmark, Finland, Germany, Italy, Norway, Sweden, and Switzerland now closed for 2012, and a deal in the U.S. to reach an agreement to avoid massive tax hikes and spending cuts still looking some way off, Friday was the last chance for many investors to book profits on bumper gains seen over the last six-months.

"It is no surprise the politicians are leaving it late. But, while there is uncertainty, the smart move is to reduce risk and take downside protection," a London-based trader said.