* 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 (Reuters) - 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 recession.
“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 2013.
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 redemptions.
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.