European shares fell on Tuesday in a choppy, thinly traded session, led by retailers after German firm Metro posted a weak outlook.

A warning by Standard & Poor's it may cut sovereign credit ratings across the euro zone had added to investor jitters, although optimism leaders would agree on bold measures to stem the region's debt crisis at a Friday meet helped limit losses.

The FTSEurofirst 300 index <.FTEU3> of top European shares provisionally closed 0.2 percent lower at 991.60 points after falling as low as 985.67 earlier in the day. It has gained more than 11 percent since hitting a three-week low in late November, but is still down 11.5 percent so far this year.

Metro was the biggest faller, down 13.9 percent in heavy volume, while the STOXX Europe 600 Retail Index <.SXRP> fell 2.1 percent.

Investors trained their sight on the December 9 summit, with French president Nicolas Sarkozy and German chancellor Angela Merkel determined to change rules to impose mandatory penalties on countries that exceed deficit targets.

If the European leaders come up with something concrete, we could expect a bit of euphoria, but that would be sustainable only if it could be implemented, said Felicity Smith, fund manager at Bedlam Asset Management, which manages $700 million (449.6 million pounds).

However, the risk of a messy unwind in share prices remains, if they don't agree. Investors should focus on companies that can generate earnings growth, finance themselves and are not dependent on cycles.

(Reporting by Atul Prakash)