(Reuters)

European stocks eased from a one-year peak on Tuesday (March 23), as a new wave of coronavirus (COVID-19) infection and a fresh lockdown in Germany raised fears of a slow economic recovery from the pandemic.

The pan-European STOXX 600 index fell 0.2 per cent after a new round of sanctions aimed at China hit Asian markets.

Germany’s DAX was flat after Chancellor Angela Merkel decided to extend a lockdown until April 18 and called on citizens to stay at home for five days over the Easter holidays.

Swedish truckmaker Volvo slumped seven per cent after it warned a shortage of semiconductors would have a substantial impact on production in the second quarter.

Its stock weighed on Europe’s industrial goods and services sector, while automakers slid 2.7 per cent to give back some of their recent gains.

“Now fears of another wave of the virus in mainland Europe have sparked worries that several countries in the region will have to reopen their economies later than anticipated,” said David Madden, market analyst at CMC Markets.

“The mood isn’t awful, traders aren’t running for the hills, but there is a sense of fatigue that the restrictive climate will drag on a bit longer.”

The STOXX 600 last week climbed to its highest since February, recouping most of the pandemic-driven losses on hopes that vaccination drives and stimulus measures will spur a strong economic rebound.

The gains have slowed this week amid worries about a surge in COVID-19 cases. The tally of new cases in France accelerated despite the start of a third lockdown, while Austria postponed the reopening of cafe and restaurants.

Travel & leisure stocks fell again, with British Airways-owner IAG, easyJet and travel company TUI down between 2.6 per cent and six per cent.

British health minister Matt Hancock said fines of 5,000 pounds (US$6,900) would be introduced for people from England who try to travel abroad before the end of June.

Swiss drugmaker Roche fell 1.7 per cent after it dropped a late-stage trial of its Huntington’s disease treatment hope, tominersen.

Swiss online pharmacy chain Zur Rose surged to the top of STOXX 600 after Morgan Stanley started coverage with an “overweight” rating.