(Reuters) - European shares ended little changed on Friday, with many investors happy to cash in on three weeks of gains ahead of the start of the U.S. fourth-quarter earnings season on Monday.

The FTSEurofirst 300 index of European shares ended the day up 0.03 percent at 1,013.73 points, pointing to a 1.2 percent gain on the week, which saw encouraging data from the United States and China momentarily offset concerns about the euro zone.

The index rallied to its intraday high of 1,022.68 in the afternoon after U.S. nonfarm payrolls data showed employment grew solidly last month, offering the strongest evidence yet that economic recovery in Europe's largest export market was gaining steam.

Traders said the positive reading had already been expected after better-than-forecast private sector jobs data on Thursday raised market expectations ahead of the nonfarm data release.

Much of the good news has already been priced into the market in the past few days, so the focus is shifting to the start of next week's earnings, Markus Huber, head of German sales trading at ETX Capital, said.

The US economy is holding up quite nicely but it seems that earnings can't match that at the moment.

Joining a number of U.S. companies that issued profit warnings, Alcoa, the largest U.S. producer of aluminum and a company often regrded as a barometer for U.S. earnings, said it will slash its global smelting capacity, in a move that will push the U.S. group into its first loss in nine quarters when it reports fourth quarter results on Monday.

EURO WOES, ENERGY GAINS

Also on Monday, German Chancellor Angela Merkel is due to meet Italian Prime Minister Mario Monti and French President Nicolas Sarkozy to hold talks on the euro zone crisis against the backdrop of unsustainably high yields on Italian debt.

Traders said investors were reluctant to open positions ahead of the meeting, as previous editions did not live up to expectations and were followed by sell-offs in equities.

Euro zone banks fell 2 percent on fears about their ability to raise cash in the market, as well as the huge sovereign refinancing needs of the region's countries.

Italy's UniCredit dropped 11 percent, recording its third consecutive double-digit percentage fall after announcing on Wednesday it was applying a deep discount to its 7.5 billion euro rights issue, raising worries the fundraising could flop and other banks may struggle to raise cash if they need it.

That is raising the spectre of bank nationalisation, which is scaring equity investors, a London-based bank analyst.

Oil stocks outperformed on Friday, rallying 0.9 percent as concerns over mounting tensions between Iran and the West kept oil prices at high levels, which tranlate into higher earnings and dividends for oil companies.

The sector is up for the fourth consecutive month in January, outperforming the FTSEurofirst 300, as investors buy into yield plays to protect themselves from the uncertain economic environment.

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