UPDATE 2-European shares extend recovery rally as Brexit deal hopes strengthen

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* Brexit trade deal imminent - EU official
* Stronger pound caps gains on FTSE 100
* France agrees to lift UK border closures
* Daimler jumps on plans to list trucks division

(Updates to close)
By Susan Mathew
Dec 23 (Reuters) - European shares logged yet another day of
strong gains on Wednesday, making up almost all of the losses at
the start of the week, cheered by signs of an imminent Brexit
trade deal.
Amid warnings that it could still go either way, talks
between the European Union and Britain are in their "final
stages" a source at the European Commission told Reuters, while
other diplomatic sources said member states had started to
prepare their procedure to implement any deal from Jan.
1. The pan-European STOXX 600 index .STOXX hit session highs
on the news and closed up 1.1% in holiday thinned trade.
"The fact that they are still talking has given another
reason to buy into the market," said David Madden, market
analyst at CMC Markets UK.
The index extended a recovery rally after a 2.3% slump on
Monday when a mutant variant of the coronavirus was detected in
the UK, sending markets into a tizzy.
London's FTSE 100 .FTSE reversed losses to pull into the
black, but still lagged regional peers as the pound GBP=
surged. .L GBP/
Further cheer came as France lifted its ban on UK travellers
and freight after the variant, said to be significantly more
transmissible than the original, had seen much of the world shut
its borders to the island country, prompting warnings from
supermarkets owners about food supply shortages.
Daimler DAIGn.DE was among the biggest boosts to the STOXX
600, up 3.3% after business newspaper Handelsblatt reported that
the German carmaker is preparing a stock market listing of its
trucks division. Germany's DAX .GDAXI jumped 1.3% in its last trading day
of the week, capping weekly losses at 0.3%.
The travel and leisure sector .SXTP gained the most on the
day, followed by banks .SX7P , while oil and gas stocks .SXEP
tracked a rise in crude prices. O/R
The STOXX 600 is on course to end a tumultuous 2020 down
about 5%, despite a stunning recovery from the
coronavirus-fueled lows hit earlier in the year on ultra-easy
monetary policy and vaccine optimism.
Banks .SX8P and energy shares .SXEP , closely linked to
global growth expectations, are down around 25% so far this
year, with Brexit uncertainty adding to the fall in lenders.
Travel shares .SXTP , among the worst hit at the onset of
the pandemic, are set to end about 16% lower - their worst year
since 2008.
On the other hand, technology stocks .SX8P , seen as
winners of the work-from-home trend, are up 12%.