(Reuters) - European shares steadied on Tuesday in low volume after strong gains in the previous week, with Italian banking stocks hit after the country's bond yields rose on worries thin liquidity would make a sovereign debt auction in Italy on Thursday tough.

Italy's UniCredit and Intesa Sanpaolo, whose performances are highly correlated to the country's bond yields, were the standout fallers, down 4.8 and 2.4 percent respectively.

Italian bond yields are rising, liquidity is light and it very difficult to predict what could potentially happen at Italy's bond auction later in the week, a London-based trader said.

There has not been a concrete resolution to the problems in euro zone debt. Italy is engulfed in the crisis and until borrowing costs come down equity markets will be hit.

The pan-European FTSEurofirst 300 index of top shares provisionally closed up 0.1 percent at 990.64 points, but volume was anaemic at not even a quarter of its 90-day daily average, with the UK market closed for a bank holiday.