* FTSEurofirst 300 falls 0.1 pct to 1,132.52 points
* Euro STOXX 50 declines 0.1 pct to 2,628.01 points
* KPN hits telecoms sector, Aggreko also weighs
* Investors unwilling to take new positions before year-end
By Sudip Kar-Gupta
LONDON, Dec 17 (Reuters) - European shares fell on Monday, hit by slumps in telecoms group KPN and power company Aggreko, as investors cashed in some equity holdings at the start of the final, full trading week of 2012.
The pan-European FTSEurofirst 300 index closed down 0.1 percent at 1,132.52 points, while the euro zone's blue-chip Euro STOXX 50 index also fell 0.1 percent to 2,628.01 points.
A 15 percent slump at KPN - after the Dutch firm cut its dividend - hit European markets. KPN's fall dragged down rival Vodafone which lost 1.7 percent to take the most points off the FTSEurofirst 300 index.
British power generator provider Aggreko also weighed on the FTSEurofirst 300 after dropping 21.7 percent as it issued its second profit warning in two months.
European shares fell in spite of early gains by U.S. stock markets which reacted positively to some signs of progress over a deal to avoid the U.S. "fiscal cliff" - some $600 billion of tax hikes and spending cuts due in January, which could push the U.S. economy into recession.
Darren Easton, director of trading at Logic Investments, said he had bought some Vodafone stock following its decline, but would generally look to sell shares before the year-end due to uncertainty over the fiscal cliff talks.
"I've been selling since the last three or four days, believing that we won't be able to stay at these highs without some deal being done on the fiscal cliff," said Easton.
"The closer we get to the end of the week, the more nervous people will get and the more likely they will be to sell the market," he added.
The FTSEurofirst 300 had risen for eight consecutive sessions at the start of December, pushing it to an 18-month intraday high of 1,141.32 points, before then slipping back for three straight sessions.
XBZ European equity options broker Mike Turner said some technical traders felt European stock markets were looking "overbought", and were therefore due for a slight sell-off.
The Euro STOXX 50 index was hovering just below a relative strength index (RSI) point of 70 points. Technical analysts view an index whose RSI is over 70 as in 'overbought' territory, while an RSI under 30 is in 'undersold' territory.
"It's tending towards the 'overbought' territory," said Turner.
Nevertheless, most European stock markets are due to end 2012 in positive territory, after pledges by the European Central Bank in July for fresh measures to tackle the region's sovereign debt crisis lifted equity markets from year lows.
The FTSEurofirst 300 and Euro STOXX 50 have risen 13 percent since the start of 2012. France's CAC-40 has gained 15 percent while Germany's DAX has risen nearly 30 percent.
Hartmann Capital trader Basil Petrides said most investors would look to cash in on gains made by European equities over the course of the year before the end of 2012, rather than take large, new positions before January.
"We'll go into a very quiet week. Most people will not want to open new positions over the Christmas holidays," he said.