European traders remain cautious as US fiscal cliff negotiations continue.

European markets eased at the early minutes of trading as investors remained wary of deadlock over the US 'fiscal cliff' negotiations.

Europe's FTSE Eurofirst 300 dropped 0.1 to 1,120.49 points while Britain's FTSE 100 slipped 0.1 percent. Italy's FTSE MIB eased 0.2 percent. France's CAC-40, Germany's DAX and Spain's IBEX remained little changed.

Asian markets closed with gains earlier with most major indices advancing in the month despite the US economy concerns.

The Nikkei average jumped to a seven-month high as the Yen's weakness prompted investors to buy exporters. The index ended 0.48 percent or 45.13 points higher to 9,446.01, the highest level since 27 April. It gained 5.8 percent in the month, the most since February.

South Korea's KOSPI saw a moderate ease in the day after touching a three-week high in the previous session. The index dropped 0.1 percent to 1,932.90. The index had made losses in the first half of the month but rebounded in the second to advance 1.1 percent.

China's Shanghai Composite index ended 0.85 percent up to 1980.12, the first gain in five days. The index dropped 4.3 percent in the month, the biggest fall since July.

Hong Kong's Hang Seng index gained 0.49 percent or 107.50 points to 22030.39.

Official release from Japan's Ministry of Economy, Trade and Commerce showed that the country's industrial output jumped 1.8 percent from the previous month, on better performance from the electronic sector. The unexpected data cheered investors in Tokyo, despite concerns on the sustainability of the performance in the coming weeks.

The Japanese government tried to boost sentiments further with a stimulus package worth Y880.3 billion ($10.74 billion) of spending to boost employment and small businesses ahead of the elections this month. But analysts suggest that the amount is too small to be strong enough to boost the country's lagging economy.

The impending 'fiscal cliff' in the United States continued to weigh on global investor sentiments. The lack of concrete action, coupled with mixed comments from lawmakers impacted traders' risk appetite.

Despite early optimism that a solution for the US 'fiscal cliff' is near, House Speaker John Boehner's comment that the talks with the lawmakers had failed to make any significant progress dampened market sentiments.

Major Movers in Asia

Currency-sensitive stocks traded higher in Tokyo. Camera maker Nikon gained 4.48 percent while Casio Computers and Citizen Holdings rose 2.49 percent each.

Shares of Hitachi and Mitsubishi Heavy Industries were up 4.16 and 2.96 percent after the firms announced plans to combine their thermal power and related divisions by 2014.

In Seoul, Joongang Construction Company, which gained 114.72 percent and telecom firm Unimo C&C, which gained 14.98 percent were the major gainers.

Property major Tianjin Songjiang Company gained the most in Shanghai, ending 10.13 percent, followed by Lawton Development Company, up 10.10 percent.

Properties gained in Hong Kong as well. Shares of China Resources Land and China Resources Land and Investment were up 3.75 and 3.77 percent respectively.