European shares were steady on Wednesday in choppy trading as investors cautiously positioned ahead of U.S. housing data, which could both confirm economic recovery and pose a threat to monetary easing.
By 1205 GMT, the pan-European FTSEurofirst 300 index of top shares was flat at 1,093.78 points after giving up the bulk of its early gains to remain off Friday's 8-month closing high.
On Tuesday, the index lost 1.1 percent after concerns about China's slowing economic growth, its biggest pull-back in two weeks as appetite for risky assets waned.
Markets aren't that easy after last week's run-up, we are currently in a consolidation. There isn't that much data out, which will be needed to give the market the next leg-up to the upside, said Markus Huber, head of German trading at ETX Capital.
Britain's third-biggest supermarket group J Sainsbury led gainers across the index, rising 3.1 percent after it beat forecasts for fourth quarter sales growth after winning market share from rivals.
Around Europe, UK's FTSE 100 index was up 0.1 percent, France's CAC 40 rose 0.1 percent and Germany's DAX index up 0.2 percent.
Today could be an important day for the DAX, technical analysts at RBS said. If the index drops below 7,032 points we should prepare for a new low in the 6,970-7,000 range.
The DAX has climbed 20 percent so far this year, outperforming its French and UK counterparts, which are up 13 percent and 6 percent respectively.
Trading volumes were thin at about a third of 90-day averages by midday for the main European indices, underlining investors' wait-and-see mode.
Investors awaited monthly U.S. existing home sales, due at 1400 GMT.
We see upside surprise potential, said Viola Stork, analyst at Landesbank Hessen-Thueringen, adding that a too optimistic number could pose at threat to monetary easing.
The question is whether and when the monetary watchdogs will abandon their ultra-loose monetary policy.
Those fears were fuelled by Narayana Kocherlakota, president of the Minneapolis Federal Reserve Bank. He said the Federal Reserve may need to start moving away from its near-zero interest rate policy as soon as this year due to the accelerating economy.
ETX Capital's Huber said fears for early tightening by the Fed were overdone. The U.S. recovery is still rather slow or mild compared to previous recoveries. Also the housing market is still at very low levels, compared to time before the subprime crisis in 2008/2009.
A German trader added he expected U.S. home sales to have increased at a slow rate and that the Fed would be not in the situation to react faster than planned.
Swedish telecoms group TeliaSonera, down 3.7 percent, was among the biggest decliners after Finnish state investment firm Solidium said it sold some shares.
Teliasonera's share price is currently pricing in a fall in its earnings per share growth rate of 2.5 percent a year for five years, on a compounded basis, StarMine data to the Tuesday close showed. This compared with a contraction of 5.9 percent for Tele2.
The shares were among the heaviest traded in the pan-European FTSEurofirst 300 with volumes at more than triple their 90-day average.
Dutch cable company Ziggo jumped at its market debut after pricing its initial public offering at the top end of its expected range. By 1205 GMT the shares were trading at 21.54 euros, well above the IPO price of 18.50 euros.