Traders work on the floor of the New York Stock Exchange while a screen shows U.S. Federal Reserve Chairman Ben Bernanke's news conference, December 12, 2012. Stocks ended little changed on Wednesday, giving up most of the day's gains after Bernanke reiterated that monetary policy won't be enough to offset damage from the "fiscal cliff." REUTERS/Brendan McDermid (UNITED STATES - Tags: BUSINESS POLITICS)

Tricia Wright London

EUROPEAN shares dipped yesterday as new stimulus steps from the US Federal Reserve were overshadowed by concern over US austerity measures, although traders made light of the falls after a recent powerful rally.

The FTSEurofirst 300 was 0.3 percent lower at 1 136.29 by midday in London, slipping after a steep three-week rally. Trading volumes were extremely thin, at a third of the 90-day daily average, exaggerating any moves on the index.

“There’s definitely some profit-taking in play and the optimism that the fiscal cliff can be averted is drying up now, but with markets sitting at or around recent highs, any uncertainty will see traders reining it in,” Mike McCudden, the head of derivatives at Interactive Investor, said.

Monument Securities head of sales Andy Ash said: “I think most people are trying to keep everything pretty tight and… flat for the rest of the year. It’s not really a fiscal cliff; it’s more of a fiscal slope. Even if they miss it by a month or two it’s not going to have the inherent damage instantaneously that people expect.” – Reuters