European equity markets steadied on Monday in light Christmas Eve trade, with most investors away for the holidays, but sentiment was hampered by the impending US fiscal cliff, dealers said.
London's benchmark FTSE 100 index of top shares gained just 0.24 percent to end at 5,954.18 points, finishing early for Christmas. The Paris CAC 40 meanwhile dipped 0.24 percent to close at 3,652.61. Frankfurt had shut early on Friday.
In foreign exchange activity, the euro advanced to $1.3219, up from $1.3181 late in New York on Friday.
All three main European stock markets will remain closed on Tuesday and Wednesday, but will 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 US "fiscal cliff" of automatic taxation hikes and spending cuts from taking effect on January 1.
Experts warn that going over the cliff could force the world's biggest economy back into recession.
"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."
Before the weekend, Frankfurt's DAX 30 stocks index fell 0.47 percent to end at 7,636.23 points on Friday. Milan also finished early, with the FTSE Mib index dropping 0.40 percent to 16,333.95 points.
Investors remain worried about debt-laden Italy after the nation's Prime Minister Mario Monti resigned late last week 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 on Monday, 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 won 0.16 percent, Shanghai gained 0.27, 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 IG Markets 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, despite fiscal cliff turmoil, with traders poised to keep a close eye on the crisis during the final days of 2013.
New York markets were also due 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.
Sentiment was 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.
"Investors continue to look to the US for an agreement on the fiscal cliff negotiations," added Capital Spreads analyst Angus Campbell.
"The markets were rocked last week by a spanner being thrown in the works and it now looks distinctly like there will not be a deal in time for Christmas which leaves only a few days left of 2012 in order to broker something before all these tax rises and spending cuts are automatically implemented by law."