Europe close: Stocks dip amid concern around outlook for summer tourism

European shares extended losses at the end of the week as fears of extended Covid travel curbs on the continent, downbeat UK retail sales and weak business survey readings all hit sentiment.

"Today's widespread losses could have an element of profit taking involved. However, we have also seen markets realise the harsh reality that while Joe Biden seems to take the Covid pandemic more seriously, that means more stringent restrictions to the detriment of economic activity," said IG senior market analyst Josh Mahony.

"With rumours that Spain will not open its borders to holidaymakers until late summer, and Biden enacting a new test and quarantine programme, the travel sector has been hit hard today."

The pan-European Stoxx 600 index slipped just 0.57% to 408.54, but while the German Dax dipped 0.24% to 13,873.97, Spain's Ibex 35 was down 1.06% to 8,036.4 and the FTSE Mibtel by 1.52% to 22,088.36.

Travel stocks were out of favour as the UK pondered a total travel ban and the European Union proposed to label hotspots of COVID-19 infections as "dark red" zones, with passengers from those areas forced to take a test before departure and undergo quarantine.

The Stoxx 600 Travel&Leisure sector index dropped 2.48% to 225.18.

Holiday group TUI slumped 13.3%, EasyJet 3.3%, and Trainline 4.96%, while Lufthansa and Air France also fell.

In the UK, Prime Minister Boris Johnson, who predicted the coronavirus would be brought under control by last Easter was notably subdued on Thursday about when restrictions could be lifted.

Eurozone business activity fell faster in January as companies were affected by the Covid-19 crisis and tightening restrictions.

The 'flash' IHS Markit composite purchasing managers' index dropped to 47.5 from 49.1 a month earlier - the third month in a row with a score of less than 50 which divided growth from contraction. December's score was broadly in line with the consensus forecast of 47.6 and made a further recession in the eurozone likely.

UK retail sales figures for December increased a worse-than-expected 0.3% against the 1.4% forecast, alongside a downwards revision to November’s figure, from -3.8% to -4.1%. Overall retail sales marked their worst year since records began.

Public sector net borrowing revealed a rise, taking Britain’s national debt above £2trn for the first time.