* STOXX 600 ends the year 3.7% lower
* Volumes thin in a shortened session
* Spain, UK lag with double-digit falls in 2020
* Energy stocks worst 2020 performers, tech outperforms
(Updates to market close)
By Sruthi Shankar and Ambar Warrick
Dec 31 (Reuters) - European stocks closed lower on Thursday,
ending 2020 in the red as tighter coronavirus restrictions in
Britain and higher U.S. tariffs on some EU products dampened
spirits on the final trading day of the year.
Volumes were thin, with many traders away and most major
European bourses closed, with the exception of London, Madrid
and Paris.
The pan-European STOXX 600 index .STOXX recorded a 3.7%
drop in 2020 - lagging its Asian and Wall Street peers that
traded near record highs - as a surge in coronavirus cases and
concerns about a chaotic Brexit weighed on the continent's
markets.
Still, the index is only 7% below its record high after
rallying about 50% from March lows and as expectations of more
stimulus, the rollout of coronavirus vaccines and a Brexit trade
deal sealed last week raised bets on a stronger recovery in
2021.
"Vaccines will inspire a global recovery, central banks will
leave rates at zero even if inflation rises to fund exploding
government deficits everywhere," Jeffrey Halley, a senior market
analyst at Oanda, wrote in a note.
"The search for yield in a zero percent world flooded with
unlimited free money from the world's central banks, means the
K-shaped recovery, asset price inflation scenario seems a
certainty."
At the end of a shortened session, London's FTSE 100 .FTSE
fell 1.5% and Paris's CAC 40 .FCHI dropped 0.9%. Spanish
stocks .IBEX fell 1%.
Among the European stock sectors, energy stocks .SXEP were
the worst annual performers, shedding 25.5% as movement
restrictions to contain the virus eroded oil demand.
Technology stocks .SX8P outperformed their peers with a
14.1% annual gain as the sector proved to be the most resilient
to pandemic-related disruptions.
The FTSE 100 marked its worst year since the 2008 financial
crisis - with its near-term prospects hit after Prime Minister
Boris Johnson ordered millions more people to live under the
strictest COVID-19 restrictions to counter a new virus variant.
.L
The German DAX .GDAXI ended 2020 with a 3.5% gain - just
below all-time highs - helped by strong demand for technology
stocks and better growth prospects for major trading partner
China.
Lender-heavy Italy's FTSE MIB .FTMIB was down 5.4% for the
year, while Spain's IBEX .IBEX - among the worst performers in
the region - marked its worst year since 2010, shedding more
than 15%.
The tourism-reliant economy was hit by pandemic
restrictions, while a consolidation in Spain's banking sector -
that brought the number of banks to 10, down from 55 prior to
the 2008 economic crisis - failed to impress investors.
France's Airbus AIR.PA , Safran SAF.PA and liquor makers
Pernod Ricard PERP.PA and Remy Cointreau RCOP.PA fell
between 1.5% to 4% after the U.S. government said it would raise
tariffs on EU products including aircraft components and wines
from France and Germany.
The move was the latest twist in a 16-year battle over
aircraft subsidies between Washington and Brussels. European markets will be closed on Friday for New Year's
Day.
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DAX best country index in Europe in 2020 https://tmsnrt.rs/3hxQjWM
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