(REUTERS) -- European shares ended down on Friday as disappointing U.S. economic data prompted investors to cash in January's gains, dragging the blue-chip index to its first weekly loss since mid-December.

U.S. GDP expanded at a 2.8 percent annual rate, a touch below economists' expectations for 3 percent, with a strong rebuilding of inventories and weak spending on capital goods hinting at slower growth this year in Europe's largest export market.

The FTSEurofirst 300 index of top European shares ended the day down 1.1 percent at 1,040.69 points after closing in overbought territory on Thursday, the index's 14-day relative strength index showed. The pan-European gauge recorded a weekly loss of 0.2 percent, its first since Dec. 18.

The market was overbought, and the U.S. data provided an excuse for profit taking, said Duarte Caldas, a market strategist at IG Markets, warning of further volatility ahead.

Auto stocks were the worst performers, falling 1.9 percent after the second-largest U.S. carmaker Ford Motor Co reported lower-than-expected fourth-quarter profit due to higher commodity prices and weak results from South America and Europe.

Italy's Fiat, which also has a strong presence in South America, shed 4.3 percent.

TALKING GREEK

There is still too much uncertainty, first of all about Greece, said IG's Caldas.

Greece is under international pressure to push through more budget cuts and implement long-agreed austerity reforms in return for a new bailout that would allow it to avert bankruptcy.

It is also in debt exchange talks with its private creditors, with an agreement very close, possibly this weekend, according to EU economic and monetary affairs chief Olli Rehn.

A Greek default would result in hefty losses for the European Central Bank, national central banks and private lenders.

That contributed to a 0.7 percent fall for the STOXX Europe 600 Banks index, denting a 12 percent jump since the start of the year fuelled by a big injection of ECB liquidity in December.

Analysts say a second dose of ECB cash next month is less likely to boost bank shares so much as the market has already priced in the move, and profits from lending to distressed sovereigns would go down in tandem with yields on that debt.

French banks Paribas and Credit Agricole , which had gained strongly so far this year, fell 3.3 and 1.6 percent after JPMorgan downgraded the pair, citing further deleveraging needs.

The Euro Stoxx 50 index of Europe's biggest shares was 1 percent lower at 2,436.62 after hitting an intra-day high of 2,467.72, a level not seen since October.

Technical analysts found reasons for bullishness in the intraday move, which points to further upside in the short term.

Today's high is still above yesterday's high, which tells me that the short-term upturn started at the end of last year continues, and we haven't seen the highest (point), said Roelof-Jan Van den Akker, senior technical analyst at ING.

The upside potential is limited because 2,500-2,520 is a very strong resistance but this might be tested next week.