(MENAFN - AFP) European equity markets steadied on Monday in light Christmas Eve trade, with most investors away for the holidays, but sentiment was poor as the US fiscal cliff loomed on the horizon, dealers said.
Frankfurt and Milan both closed on Friday for an extended festive break, while London and Paris were due to shut at the half-way stage.
The British capital's benchmark FTSE 100 index of top shares added 0.26 percent to 5,955.19 points in late morning deals, while the Paris CAC 40 slid 0.07 percent to 3,658.71 points.
In subdued foreign exchange activity, the euro advanced to 1.3214, up from 1.3181 late in New York on Friday. Gold prices firmed to 1,663.21 an ounce on the London Bullion Market, from 1,651.50.
Before the weekend, Frankfurt's DAX 30 stocks index fell 0.47 percent on Friday to finish at 7,636.23 points for an early shutdown.
All three main European stock markets will close on Tuesday and Wednesday but reopen for business on Thursday.
With an end-of-year deadline just days away, sparring Washington politicians have yet to strike a compromise that could prevent a "fiscal cliff" of automatic taxation hikes and spending cuts from taking effect on January 1.
"Hopes have receded substantially during the past week that US politicians will be able to reach a compromise to avert the US going over the 'fiscal cliff' in the few remaining days before the end of the year," said ETX Capital trader Markus Huber.
"Trading volume is expected to be on the low side today as many major stock markets are either closed altogether or are only open for half a day."
He added: "It would not be too surprising if some moderate general profit taking would take place with traders taking some money off the table ahead of the holidays."
Elsewhere on Monday, Madrid's IBEX 35 index declined 0.14 percent to 8,279.70 points. Milan's FTSE Mib had dropped 0.40 percent to finish at 16,333.95 points on Friday, when it also closed early.
Investors remain worried about debt-laden Italy after the nation's Prime Minister Mario Monti resigned late on Friday after the Italian parliament passed a key budget vote.
The parliament was dissolved on Saturday, paving the way for general elections.
Monti's resignation ended a technocrat government that was brought in to save Italy from the eurozone debt crisis.
Across in Asia, equities rose in quiet pre-Christmas trade after big losses in the previous session, as US lawmakers remain deadlocked in talks to avert the fiscal cliff.
With many markets open for just a half day, Hong Kong closed 0.16 percent higher, Sydney added 0.25 percent and Seoul was flat. Tokyo, Manila and Jakarta were closed for public holidays.
"It has been a quiet session in the Asian region ahead of the Christmas break and with Japanese markets closed for the Emperor's Birthday," said strategist Stan Shamu.
"Asian markets have managed to edge higher... This is a bit of an improvement on the losses seen in the risk space on Friday when fiscal cliff negotiations stalled."
Wall Street had finished the week in positive territory on Friday, despite fiscal cliff turmoil, with traders poised to keep a close eye on the crisis during the final days of 2013.
New York markets are also to shut early on Monday and remain closed on Tuesday, with action expected to be light in the coming days -- especially since lawmakers are not due back in town until midweek.
Experts warn that going over the so-called fiscal cliff could take the world's biggest economy back into recession.
If the 600 billion package comes into effect and a less painful budget to cut the nation's deficit is not agreed, economists say it will pull the rug out from under business activity in the United States, which would have a knock-on effect for the world economy.
Investors were hit after House Speaker John Boehner late Thursday scrapped a vote on a bill that would have extended tax cuts for all Americans earning less than 1 million even if a wider deal could not be struck.
The move, which he described as his "Plan B", was dropped because he did not have enough support. He said his party would recess until after Christmas.