(Reuters) – European shares slipped on Friday, ending an action-packed week on a somber note on worries over the economic impact of the resurgent COVID-19 pandemic and the fate of a Brexit trade deal. The pan-European STOXX 600 index slid 0.8%, extending losses after a dour 2021 economic forecast from the European Central Bank pushed it into the red on Thursday. The index broke a five-week winning streak, falling 1%, as stalemate in talks between the European Union and Britain raised chances of Britain exiting from the bloc without a trade deal. Investors will be watching for Brexit updates with a Sunday deadline for a last ditch attempt at a deal to govern around $1 trillion in annual trade, currently free from tariffs and quotas. “Both the UK and the EU have started saying that not only is a no deal outcome possible but that it’s the most likely outcome. So markets are spooked about it,” said Andrea Cicione, head of strategy at TS Lombard. “Eventually a deal will be ironed out. If talks fail now, the two parties will come back at the start of next year.” As European bond yields dipped, banks continued their slide. Spain’s lender-heavy main index dropped 1.5%, while London’s FTSE 100 fell for the first time in nine sessions. [.L] [GVD/EUR] Drugmaker Sanofi’s 4% slide weighed the most, after it said its COVID-19 vaccine candidate developed with GlaxoSmithKline showed an insufficient immune response in clinical trials. GSK shares were trading 0.3% lower. Meanwhile, as EU leaders unblocked a 1.8 trillion euro ($2.18 trillion) financial package late on Thursday, in the United States, fiscal stimulus appeared unlikely after Democrat House Speaker Nancy Pelosi suggested that wrangling over a spending package could drag on through Christmas. A raft of stimulus measures since the onset of the pandemic has lifted hopes of a global economic recovery. The STOXX 600 has risen around 45% from lows hit in March, but still remains down more than 6% for the year. Among other individual stocks, Rolls-Royce slumped 7.9% after it downgraded this year’s cash outflow forecast and warned the outlook remained challenging. Telecom gear maker Ericsson slid after filing a U.S. lawsuit against Samsung for alleged breaches in negotiations for royalty payments and to license patents. This could impact Ericsson’s operating income by 1 billion Swedish crowns ($118.70 million) to 1.5 billion per quarter beginning in the first quarter 2021, the company said. Europe’s telecoms sector dropped 2.8%, posting its worst day in over 10 weeks.
(Reporting by Susan Mathew and Amal S. in Bengaluru; Editing by Arun Koyyur, Kirsten Donovan)