A low volume rally in European shares on Monday buoyed by the approval of Greek austerity measures needed to avoid a messy default was looking to peter out as traders said short-sellers were beginning to position for a fall in the market.

Approval of the austerity cuts is still needed by euro zone finance ministers at a meeting on Wednesday in order to secure a fresh bailout package and with riots kicking off in Athens against the measures, gains were seen as limited.

Obviously we have seen the market jump up this morning on Greece, but there is some scepticism, said Joe Rundle, head of trading at ETX Capital. Volumes are thin and people are looking to sell into this rally.

It is not good for economic confidence when you see riots and austerity cuts are on the front page. It stops people spending on the real world and erodes consumer confidence.

The pan-European FTSEurofirst 300 <.FTEU3> index of top shares provisionally closed up 0.6 percent at 1,070.26 points after being up as much as 1,074.33 and down as low as 1,063.11.

Cable & Wireless Worldwide jumped 44.5 percent in strong volume, to top the leader board, after Vodafone Group , the world's largest mobile operator by revenue, said it was considering a bid for the group.

(Reporting by Joanne Frearson)