(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window)
* Tech sector boosts markets globally
* Banks, oil, travel stocks hit by lockdown fears
* Prosus rallies to an all-time high
(Updates to market close)
By Sruthi Shankar
Jan 25 (Reuters) - European shares closed at two-week lows on Monday as a slump in German business morale underscored the damage from tighter COVID-19 restrictions, while investors feared a slow vaccine rollout could further delay an economic recovery.
The Ifo economic institute's business climate index fell to 90.1 in January from an upwardly revised reading of 92.2 in December, while a Reuters poll had forecast a reading of 91.8. German economy, Europe's largest, will likely reach its pre-pandemic levels in mid-2022, according to a draft document prepared by the economy ministry, seen by Reuters. Q1 GDP now looks likely to fall by at least 1% qoq, assuming that the restrictions for retail and services will only be gradually lifted after Feb. 14," Deutsche Bank (DE: DBKGn )'s chief economist, Stefan Schneider, wrote in a note.
"Hence, our 4-1/2% forecast for the year as a whole looks somewhat ambitious, but given the overall uncertainty we currently see no real need to lower it."
Markets took a turn for the worse after U.S. drugmaker Merck (NS: PROR ) MRK.N said it would end development of its two COVID-19 vaccines. PFE.N announcing delays of nearly a month to its COVID-19 vaccine shipments to the European Union earlier this month, while AstraZeneca AZN.L has announced a large cut in supplies to the bloc. Prime Minister Boris Johnson said he was looking at toughening border quarantine rules because of the risk of "vaccine-busting" coronavirus variants. Airways-owner IAG (LON: ICAG ) IACG.L , Ryanair RYA.I , Lufthansa LHAG.DE and Air France KLM AIRF.PA fell between 3.3% and 7.7%, while retailers .SXRP fell 1.5%.
Several Spanish regions ramped up anti-coronavirus measures, while France was looking at a third national lockdown. stocks .SX8P gave back early gains, but losses were modest as their U.S. peers traded at all-time highs.
French state-controlled power group EDF EDF.PA slumped 15.6% to the bottom of STOXX 600 after broadcaster BFM Business reported that the European Commission wanted a further six months of talks on a planned restructuring. source in the French finance ministry denied the report.
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