European shares steadied today in low volume as investors remained wary after Italian 10-year bond yields stayed near 7 per cent, deemed by many analysts as unsustainable, following a disappointing debt auction.

But bargain hunting in cyclical miners gave the market some support as investors were tempted to buy after the sector posted sharp falls in the previous session.

The STOXX Europe 600 Basic Resources index was up 0.3 per cent to feature among the best performers, after falling 1.9 per cent in the previous session.

Trade was choppy with European stocks moving in and out of negative and positive territories due to low volumes distorting market movements.

Although Italian bond yields fell from recent record highs at the debt auction, investors were little impressed as yields on 10-year paper were stuck near 7 per cent-- above the level where other euro zone governments have been forced to seek bailouts.

Banks which have high exposure to euro zone peripheral debt were among the worst performers on concerns about the high funding costs.

French banks Credit Agricole and Societe Generale , which have large exposures to Italian debt, were down 0.6 per cent and 0.5 per cent respectively to feature among the biggest losers on the French CAC index.

"I see little reason for Italian bond yields to come down for some time because it will take weeks and months to get any sort of progress from the austerity measures," Howard Wheeldon, senior strategist at BGC Partners, said.

"Markets are short of patience and there is no reason to be positive, the higher the yields the higher the potential for problems."

Although an injection of cheaper funding by the European Central Bank, and government austerity measures, have eased pressures on Italian shorter-term debt, longer-dated bonds are still a challenge and there are worries about Italy's refinancing hurdles next year.

Reuters