Europe close: Stocks drift lower as investors weigh up costs of new variant

European shares gave up tenuous morning gains on Thursday and slipped into the red for the most part as investors continued to monitor the efficacy of vaccines against the Omicron coronavirus variant.

The pan-European Stoxx 600 was little changed, drifting lower by 0.08% to 476.99 with most major bourses following suit as worries about further lockdowns to stymie the spread of the new variant dampened sentiment.

Markets have rallied on suggestions that Omicron may be milder than the delta strain. However, the World Health Organisation’s technical lead on Covid-19 on Wednesday said it was “too early to conclude” that.

“Having recovered most of the losses seen in the post-Thanksgiving sell-off, investors (are) now caught between hope that vaccines will be able to afford enough protection against the new variant, against concerns that even a significant acceleration in infection rates might overwhelm health systems,” said CMC Markets analyst Michael Hewson.

“The news that a third dose of the Pfizer/BioNTech vaccine would afford decent protection against Omicron did initially prompt a sharp move higher, however the move didn’t stick, largely down to ongoing uncertainty about how the spread of the virus will affect economic growth right now.”

In equity news, shares in UK shoe brand Dr Martens retreated 3% as it posted higher profits but warned of supply delays in the US.

Shares in Deutsche Bank were down after a Wall Street Journal report that the US Justice Department stated the bank failed to tell prosecutors about an internal complaint in its asset-management arm's sustainable investing business.

Finnish oil company Neste dropped 4.7% after the resignation of its chief executive officer.

Shares in French fashion group SMCP fell after an ownership battle heated up as major shareholders claimed a 16% stake in the firm had been illegally transferred to an offshore account.

UniCredit jumped more than 11% after the Italian lender announced that it plans to pay out at least €16bn in share buybacks and dividends to shareholders by 2024.

Aircraft engine maker Rolls-Royce fell after the company said defence trading was in line with expectations but civil aerospace engine sales and aftermarket activity were at the low end of guidance.