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UPDATE 2-European shares slip as jump in virus cases offsets vaccine hopes
Published at 23/11/2020 at 17:42

(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window)

* AstraZeneca drops as vaccine efficacy rate lower than peers

* Euro zone business activity falls sharply in November

* Cineworld surges on additional capital raising

* French bank Credit Agricole jumps on takeover deal

(Updates to close)

By Shashank Nayar and Shriya Ramakrishnan

Nov 23 (Reuters) - European shares closed lower on Monday as investors weighed signs of progress in developing a COVID-19 vaccine against the threat of economic damage from sweeping business restrictions to contain a surge in infections.

Boosting global equity markets earlier on Monday, AstraZeneca Plc said its COVID-19 vaccine, developed along with the University of Oxford, could be around 90% effective.

But AstraZeneca's shares fell 3.8% as traders took into account its lower efficacy rate compared with rivals such as Pfizer , which has so far reported the highest efficacy rate of 95%, followed by Moderna's 94.5%.

The pan-European STOXX 600 index ended down 0.2% after having gained as much as 0.6% in morning trading.

"There is a significant chance of continuing lockdown measures as the second wave isn't under control yet," said Bert Colijn, senior economist for the euro zone at ING.

"That means that some form of lockdown in December will continue to depress economic output before things actually start getting better."

The benchmark index has gained nearly 40% from its March lows, helped by a flood of stimulus measures, but gains remain capped as data points to a faltering economic recovery from a pandemic-induced recession.

Euro zone business activity contracted sharply in November as new virus restrictions across European countries forced many companies in the bloc's dominant service industry to close temporarily, a survey showed.

Manufacturing activity, however, remained a bright spot as many factories remained open during lockdowns.

"The market seems to be looking through the current expected growth dip and focusing on the synchronous economic recovery next year," analysts at Berenberg said.

British domestic stocks were buoyed by hopes of a swifter economic recovery, after the British government said it was working with Scotland, Wales and Northern Ireland to ease COVID-19 restrictions over Christmas.

That helped the UK's domestically focused mid-cap index

gain 0.4%, along with hopes of a post Brexit-trade deal with the European Union.

Among individual stocks, Cineworld , owner of the U.S. Regal cinema chain, surged 20% after securing an additional $750 million in funding to cushion itself against the impact of the coronavirus as it aims to reopen next year.

French bank Credit Agricole jumped 4.1% after its Italian unit launched an offer to buy Italian bank Credito Valtellinese (Creval) .

Germany's HelloFresh fell 3.3% after the company said it bought Factor75, a U.S. provider of fully prepared meals, for up to $277 million.

(Reporting by Shashank Nayar and Shriya Ramakrishnan in Bengaluru; Editing by Shounak Dasgupta and Jane Merriman)

((Shashank.Nayar@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 6182 2256))