UPDATE 2-Weak German business morale, vaccine delays push European stocks to 2-week low

(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 pan-European STOXX 600 index .STOXX reversed early
gains and finished 0.8% lower. The German DAX .GDAXI fell
1.7%, France CAC 40 .FCHI was down 1.6% and the UK's FTSE 100
.FTSE declined 0.8%.
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.
The 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. "German 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'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."
Economy-linked banking .SX7P , auto .SXAP , oil & gas
.SXEP and travel & leisure .SXTP stocks took the biggest
hit, falling between 1.9% and 3%.
Markets took a turn for the worse after U.S. drugmaker Merck
MRK.N said it would end development of its two COVID-19
vaccines.
Pfizer 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.
British Prime Minister Boris Johnson said he was looking at
toughening border quarantine rules because of the risk of
"vaccine-busting" coronavirus variants. British Airways-owner IAG 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.
Technology stocks .SX8P gave back early gains, but losses
were modest as their U.S. peers traded at all-time highs.
Finnish telecom equipment maker Nokia NOKIA.HE jumped
12.9%, while technology investor Prosus PRX.AS gained 3.6% to
hit an all-time high.
Investors sought refuge in defensive sectors such as
telecoms .SXKP and healthcare .SXDP which gained 0.9% and
0.7%, respectively.
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. A source in the French finance ministry denied the report.