Trading volumes are expected to be thin in light of the Thanksgiving holiday in the United States
European shares were little changed on Thursday as an extension of coronavirus restrictions in Germany and a grim growth forecast for the United Kingdom brought the focus back to the economic impact from the Covid-19 pandemic.
The pan-European STOXX 600 index was flat at 0920 GMT, with gains in tech and healthcare stocks offset by declines in the autos and energy sectors.
A second wave of Covid-19 infections swept across Europe last month, prompting Germany, France and the United Kingdom to once again impose tough lockdown measures, dealing a heavy blow to business activity as restaurants, gyms and shops remained closed.
The benchmark STOXX 600 index is however still on course for its best month on record and market participants expect European equities to touch record highs next year, following promising vaccine trial results from three major drugmakers.
"The global rally seems to have paused for now ... while the release of vaccine results is promising, we do not know yet when this pandemic will be completely over," Hussein Sayed, chief market strategist at trading firm FXTM wrote in a note.
Trading volumes are expected to be thin in light of the Thanksgiving holiday in the United States.
Chancellor Angela Merkel said on Wednesday Germany will extend restrictive measures imposed early this month to rein in a second wave of infections that is sweeping much of Europe, until at least Dec. 20.
Germany's blue-chip DAX was largely flat, while France's benchmark CAC 40 also erased early gains to trade slightly higher after a survey showed consumer confidence in the country fell to a two-year low in November.
Investors were also awaiting details on post-lockdown restrictions in England.
British health secretary Matt Hancock will tell the parliament later in the day which of three tiers, ranging from the lowest at tier 1 to the highest at 3, each English local authority will fall under, when a national lockdown ends next week.
UK's domestically exposed stocks extended losses after a sell off in the previous day, when Finance Minister Rishi Sunak warned the economy was on course to shrink by 11.3% this year and unveiled plans to borrow amounts not seen before during Britain's peacetime.
In company news, Amigo Holdings dropped 1.3% after the subprime lender reported a 36.5% slump in first-half revenue and flagged "material uncertainty" about its future operations.