By Sruthi Shankar
(Reuters) - European stocks recorded their worst weekly decline since mid-June on Friday, as investors feared that a second wave of coronavirus infections will hamper economic recovery, while banking stocks sank to an all-time low.
The pan-European STOXX 600 index <.STOXX> slipped 0.1%, failing to match Wall Street gains on signs that U.S. lawmakers were making progress on a $2.2 trillion stimulus package that could be voted on next week.
The index shed 3.6% in a week dominated by concerns about new coronavirus restrictions in Europe, a faltering stock rally in Wall Street's technology giants and worrying economic data from both sides of the Atlantic.
France and Britain set new records of daily COVID-19 infections on Thursday, while the Spanish government recommended reimposing a partial lockdown on all of the city of Madrid after the country surpassed 700,000 cases, the highest number in Western Europe.
"New restrictions in Europe, less fiscal support, fading liquidity impulse and election risk should weigh on activity in Q4," European equity strategists at Barclays wrote in a note. "Economic surprises are starting to roll over from all-time high levels."
European banks <.SX7P> sank to a fresh record low as investors shunned the sector hit by a cocktail of lower global borrowing costs, rising bad loans due to the economic downturn and dirty money scandal that made it the worst performer this week.
British betting firm William Hill
Ladbrokes and bwin brand owner GVC
Still, worries about new travel restrictions weighed on airlines, with British Airways-owner IAG
Automakers <.SXAP> fell 1.4% after an industry body said British car production fell by an annual 45% in August, as the sector continues to suffer due to the fallout from the virus outbreak.
Paris Match publisher Lagardere
Swedish home appliance maker Electrolux
(Reporting by Sruthi Shankar in Bengaluru; Editing by Saumyadeb Chakrabarty, Shounak Dasgupta and Peter Graff)