European shares slip after vaccine-driven rally

(Reuters) – European stocks eased from eight-month highs on Tuesday as tighter coronavirus restrictions across the continent halted a market rally that was powered by encouraging COVID-19 vaccine updates.

The pan-European STOXX 600 index <.stoxx> slipped 0.1% by 0808 GMT. It closed at it highest level since Feb. 27 on Monday after positive data from drugmaker Moderna’s COVID-19 vaccine.

Near-term economic outlook remains hazy, with Sweden moving to restrict the size of public gatherings as COVID-19 cases spike and a British medical adviser suggesting strengthening the three-tier system of restrictions when the full lockdown in England ends.

European banks <.sx7p> retreated after a more than 3% surge. BBVA fell 3.4% after it and smaller rival Sabadell said they were in talks to create Spain’s second-biggest domestic lender by assets.

Oil and gas <.sxep> and travel <.sxtp> stocks also slipped.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D’Silva)