UPDATE 2-Pandemic worries weigh on European shares

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* Volkswagen rises after 2021 outlook
* Defensive sectors limit losses
* Adidas, H&M hit by Xinjiang outcry
* Cineworld slides on $3 bln loss for 2020

(Updates to close)
By Sruthi Shankar and Medha Singh
March 25 (Reuters) - European stocks ended lower on Thursday
as fears over extended coronavirus restrictions in the eurozone
sparked a flight from energy and financial stocks to firms seen
as safer during heightened economic uncertainty.
The pan-European STOXX 600 index .STOXX slipped 0.3%,
weighed down by a drop in oil and gas stocks .SXEP on the back
of weaker crude prices, and bank stocks .SX7P as bond yields
declined. O/R
The benchmark index pulled back from 13-month highs last
week as a new wave of coronavirus infection and a fresh regional
lockdowns overshadowed a surprisingly strong recovery in March
business activity.
Stocks in London .FTSE underperformed their regional peers
as the European Union mulled the possibility of blocking
shipments to countries with higher inoculation rates such as
Britain, or which are not sharing doses they
produce. "A decision to limit (vaccine) flow could severely hamper
the UK reopening timeline," said Joshua Mahony, senior market
analyst at IG.
"With the UK clearly well ahead of EU nations in the
vaccination drive, there is a real risk that politicians such as
Angela Merkel push for action as their popularity wanes."
Wall Street was weighed down by technology stocks, as
investors shrugged off better-than-expected jobless claims data
while awaiting U.S. President Joe Biden's first formal White
House news conference. .N
Quarter-end portfolio rebalancing by institutional investors
also added to the downward pressure on stocks, analysts said.
Germany's DAX .GDAXI ended marginally higher on a boost
from auto stocks led by Volkswagen VOWG_p.DE after the company
forecast 2021 results would match previous year's level.
Earlier in the session, the DAX has fallen as much as 1.3%
as the number of coronavirus cases in the country saw the
biggest increase since Jan. 9.
H&M HMb.ST dropped 1.6% after at least one Chinese online
retailer appeared to drop its products following social media
attacks on the Swedish company for saying it was "deeply
concerned" about reports of forced labour in Xinjiang in China.
Shares of German sportswear firm Adidas ADSGn.DE , which
also came under fire in China, was down 6%. Cineworld CINE.L slumped 7% after it reported a $3 billion
loss for 2020 and said it will ask shareholders to approve a
raise in its debt ceiling. Gains in defensive sectors such as utilities .SX6P ,
telecoms .SXKP and food & beverage .SX3P , which tend to
decouple from the economic cycle, offered some support to the
market.