NEW YORK (TheStreet) -- U.S. stocks finished lower Friday after European markets posted losses on Friday, with analysts saying that a steep run up warrants a "breather" for equities.

The Dow Jones Industrial Average closed down 2.7 points, or 0.02%, at 12,978. The S&P 500 lost 4.2 points, or 0.3%, at 1370. The Nasdaq shed 12.8 points, or 0.4%, at 2976.

"We are still looking for a minor top in the major indices in the near term, as the market is very overbought," wrote Mark Arbeter, technical analyst with S&P Capital IQ. "S&P 500 has run into potentially stiff chart resistance from the 2011 highs, while the Dow Jones Industrials, the NASDAQ and the S&P MidCap 400 deal with the big round numbers of 13,000, 3,000 and 1,000, respectively."

Investor focus shifted to Europe as no economic releases were expected from the U.S. today. European Union leaders made some progress at a two-day meeting in Brussels. Euro area leaders agreed to allow the region's bailout fund to raise money for Greece's bond swap. The move will help Greece avoid a default in late March and is a step toward getting the country its second round of bailout money.

Policymakers in Europe also decided to help expand the permanent bailout fund more quickly by possibly starting with two payments in 2012, and completing a capitalization a year ahead of time.

Investors are closely monitoring whether private creditors will participate in Greece's debt swap. There remains a possibility that the International Swaps and Derivatives Association could decide that forcing creditors to accept the agreement collectively will trigger credit default swaps. Such a case could lead to a contagion effect where financial institutions would have to pay insurance contracts.

Steve Ayer, managing director of Strata Wealth Management at HighTower Advisors, said that the markets losses were more a reflection of a steep run-up. "The summit in Europe isn't giving much direction to market at all.. There's nothing too pressing that the market is fearful of."

Germany's DAX closed down 0.29% while London's FTSE lost 0.34%. Japan's Nikkei Average settled up 0.72% and Hong Kong's Hang Seng was up 0.81%.

In corporate news, Internet-based photo and greeting cards company Shutterfly ( SFLY) is reportedly looking to acquire Eastman Kodak's online photo services business for $23.8 million. Kodak has entered bankruptcy protection, and the agreement between the two parties characterizes Shutterfly's offer as the initial "stalking horse" bid for an auction process to be conducted through the bankruptcy court. Shutterfly shares jumped 16.3% to $31.29.

Yelp ( YELP) stock was trading at $24.59 a piece on the company's first day of trading on the New York Stock Exchange. The online business review company said its initial public was priced at $15 a share, above its projected range of $12 to $14, on Thursday. Yelp is selling 7.1 million shares, while its charitable foundation will sell 50,000. The IPO values Yelp at $900 million.

A German court has dismissed a patent infringement suit brought by Apple ( AAPL) against Samsung Electronics over slide-to-unlock technology, and also rejected a claim by Samsung that Apple infringed one of its third-generation, or 3G, wireless patents, the Wall Street Journal reports.

Separately, ahead of Apple's expected iPad3 launch at a March 7 event in San Francisco, DigiTimes reported that the company may have trouble keeping up with demand for the product due to a shortage of high resolution display supplies. Shares were up 0.1% to $545.03.

April oil futures were down $2.14 to $106.70 a barrel after topping $110 a barrel yesterday on nervousness about tensions in the Middle East. In other commodities, April gold futures were down $12.40 to $1,709.80 an ounce.

The dollar index was 0.8% higher. The benchmark 10-year Treasury was up 12/32 diluting the yield to 1.988%.

-- Written by Chao Deng and Andrea Tse in New York.

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