European equity indexes closed off multi-month highs on Tuesday after an early rally failed to breach technical resistance, amid ongoing concerns about the fate of the U.S. economy in 2013. However, losses were offset by the banking sector as European Union finance ministers met in Brussels to discuss details of a possible banking union.
The pan-European FTSEurofirst 300 Index closed slightly lower, failing to hold on to a 17-month intra-day high of 1,125.79.
The EuroSTOXX 50 index of euro zone blue chips finished eked out a small gain, just shy of the March and September peaks.
"At the moment it is normal consolidation," said Petra Kerssenbrock, technical analyst at Commerzbank. "We had a very strong move, two weeks which led us up to the resistance in the area 2,600 to 2,611 and that is the resistance that I am really looking at ... We could make a first attempt this week, but I doubt that it would be successful."
Finance ministers from the European Union met to discuss proposals to allow the European Central Bank to supervise euro zone banks. Reports from Reuters suggested any deal would not be confirmed on Tuesday but more talks for an agreement will resume before the end of the year.
This was seen as positive for banking sector stocks with Credit Agricole and Commerzbank showing healthy gains. Spanish banks such as Bankia had already pushed higher with news on Monday confirming an EU bailout for the struggling financial institutions.
In the U.S., the forthcoming "fiscal cliff" weighed on sentiment. An ongoing argument over how to resolve almost $600 billion of spending cuts and tax increases has dampened investor activity in recent weeks.
The White House rejected a proposal from congressional Republicans on Monday, saying that it included tax reforms that would undermine President Barack Obama's pledge to raise taxes on the wealthiest Americans.
In the U.K., construction purchasing managers' index (PMI) figures were released showing a contraction in the last month. The number for November came in at 49.3 which is a fall from October's figure of 50.9.
In earnings news, U.K.-based travel firm Tui Travel released full-year earnings showing profit rising by 8 percent; stock in the company was higher by 0.42 percent.
Brewer Greene King released first-half results that were better than expected; shares rose by 0.66 percent. Also in the U.K. plumbing supplier
Swiss firm Oerlikon announced late on Monday that it was selling its textile units to China's Jinseng group; shares rose by over 2.5 percent.