UPDATE 2-European stock rally halts as coronavirus restrictions weigh

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* Travel stocks fall on tighter movement restrictions
* Spain's BBVA slips on news of merger with Sabadell
* Intermediate Cap surges after strong results

(Updates prices, adds comment)
By Sruthi Shankar and Shashank Nayar
Nov 17 (Reuters) - European stocks slipped from eight-month
highs on Tuesday, as tighter coronavirus restrictions across the
continent raised doubts about a swift economic rebound and
countered optimism about a COVID-19 vaccine.
The pan-European STOXX 600 .STOXX ended 0.2% lower. The
index jumped over 1% to close at its highest level since late
February on Monday following positive data about drugmaker
Moderna 's MRNA.O COVID-19 vaccine.
Pfizer and partner BioNTech flagged strong progress in their
COVID-19 vaccine last week, sparking a rally in global equities.
"Euphoria is understandable, but unsustainable," strategists
at French bank Societe Generale wrote in a note. "The surge of
COVID cases in the US and Europe's second lockdown guarantee
global economic weakness for several more months."
Many European countries have imposed curbs to fight a
resurgence in virus cases. Sweden moved to restrict the size of
public gatherings and a British medical adviser suggested
strengthening the three-tier system of restrictions when the
full lockdown in England ends. Travel stocks .SXTP fell 1.1%, with British airline
EasyJet EZJ.L down 1.9% after it recorded a 1.27 billion pound
($1.68 billion) annual loss, the first in its history as the
pandemic ravaged the travel industry. Healthcare .SXDP and tech .SX8P sectors that have
outperformed the broader market during the pandemic declined
1.3% and 0.6% respectively.
Meanwhile, growth-linked cyclical sectors such as oil and
gas .SXEP and automakers .SXAP reversed early losses and
jumped 0.7% as investors bet progress in the development of a
COVID-19 vaccine will support the battered sectors.
"The vaccine news eliminates downside risks but is more
likely to trigger a rotation than an outright risk rally. We
think cyclicals are set to outperform in this rotation," said TS
Lombard's Oliver Brennan.
However, banks came under pressure as Spain's BBVA BBVA.MC
fell 4.4% after it and smaller rival Sabadell SABE.MC said
they were in talks to create the country's second-biggest
domestic lender by assets. Sabadell jumped 6.8%.
British asset manager Intermediate Capital Group ICP.L
surged 7.9% to the top of the STOXX 600 after reporting strong
half yearly results. Tobacco company Imperial Brands IMB.L jumped 7.3% after it
forecast a rise in profit for 2021, helped by expected
improvements in its e-cigarette business.