By Susan Mathew
(Reuters) - European shares fell on Thursday, following downbeat business activity data from the euro zone, while investors awaited fresh signals from Brexit negotiators less than five weeks ahead of the deadline.
The UK and the European Union might have made enough progress to agree to a trade deal in the next few days, BBC's political editor Laura Kuenssberg said on Wednesday. EU diplomats said on Thursday a deal could come together as soon as Friday.
"We think that eventually some kind of a very limited deal will be agreed upon at the very last minute. Not too many details or an overarching agreement," said Teeuwe Mevissen, senior market economist at Rabobank, Amsterdam.
London's FTSE 100 gave up 0.2% after rallying over 1% in the last session, after UK became the first country to approve Pfizer (NYSE:PFE) and BioNtech's COVID-19 vaccine for roll-out next week.
The pan-European STOXX 600 index fell 0.3% with banks leading declines, while production indecision by OPEC+ member weighed on crude prices. Discussions around the EU budget, as well as U.S. jobs data due on Friday are among other events on investors' radar, Rabobank's Mevissen added.
IHS Markit's composite PMI on Thursday showed euro zone business activity contracted sharply last month, with services PMI sinking to 41.7 from October's 46.9.
The STOXX 600 has recovered about 45% from March lows, with November's bumper rally lifting it from a downtrend, but it still remains close to 10% below its highs this year.
While Europe looks to expected monetary policy easing from the European Central Bank next week, in the United States Republicans and Democrats in Congress remained unable to reach an agreement on a $908 billion relief proposal.
Among individual stocks, Rolls-Royce (OTC:RYCEY) Holdings topped the STOXX 600, and was up 6% after a report said it was considering a possible re-entry into the narrow-body jetliner market.