European stocks struggle with Brexit and stimulus talks in the spotlight

European stocks struggled for gains on Friday, as investors kept close watch on Brexit talks and discussions around a U.S. stimulus package.

With a fifth day of gains in the balance, the Stoxx Europe 600 index
SXXP,
-0.27%

was flat at 397.27. The index has gained 1.8% this week. The German DAX
DAX,
-0.08%

was up 0.2% and the French CAC 40
PX1,
-0.38%

was down 0.1%.

The FTSE 100
UKX,
-0.23%

was up 0.1%, paring earlier gains as the pound
GBPUSD,
-0.76%

trimmed losses, last down 0.4% to $1.3529 over concerns that a post-Brexit trade deal may not be reached by the Dec. 31 deadline.

Both sides have been casting doubt, with European Commission President Ursula von der Leyen citing worries about a key sticking point — fishing rights — and U.K. Prime Minister Boris Johnson has warned of a possible ‘no-deal’ outcome. Von der Leyen said talks will continue on Friday, following Thursday’s talks. The European Union’s chief negotiator, Michel Barnier, said on Friday there are “just a few hours left” for a deal to be struck, as he reportedly told European lawmakers it was “the moment of truth” for both sides.

The EU is insisting on a deal by Sunday to allow for ratification of any agreement before year-end.

“Barring any breakthroughs today, I would be surprised if markets don’t see some caution today given the unusual level of weekend risk, particularly on the Brexit side,” said Craig Erlam, senior market analyst at Oanda Europe, in a note to clients.

Read: How Britain and France are gearing up for year-end Brexit border chaos, and why it matters

Brexit pressures come as fresh data showed U.K. retail sales tumbled in November as fresh COVID-19 restrictions kicked in. Tougher restrictions will be imposed from Saturday for millions in the U.K., with several European countries also tightening up during the crucial holiday period for many businesses.

Data on Friday showed a surprise gain in German business sentiment in December.

U.S. stocks
DJIA,
-0.46%

SPX,
-0.43%

COMP,
-0.08%

traded flat a day after all three major indexes closed at record highs. A jump in weekly jobless claims drove hopes that lawmakers will push to get a stimulus deal agreed.

Congressional leaders are reportedly nearing a deal worth around $900 billion, but Senate Majority Leader Mitch McConnell warned on Thursday that it was “highly likely” lawmakers would need to work into the weekend. Congress must also pass a bill to prevent a government shutdown before closing for the holidays on Saturday.

Fresh hopes on vaccines came after a panel of independent advisers to the Food and Drug Administration on Thursday voted to support the authorization of biotech Moderna’s
MRNA,
-3.31%

COVID-19 vaccine candidate for emergency use.

Deal news was lifting a handful of stocks. Shares of Vivendi
VIV,
+2.15%

rose 2.5%, after the media group said it would sell an additional 10% stake in its subsidiary Universal Music Group to a consortium led by Chinese multinational conglomerate Tencent Holdings
700,
-0.51%

for €3 billion ($3.6 billion).

Shares of Philips
PHIA,
+2.15%

rose 2%, after the Dutch medical-technology company said it has agreed to buy U.S. provider of remote cardiac diagnostics and monitoring BioTelemetry
BEAT,
+16.51%
,
in a $2.47 billion deal.

Shares of EssilorLuxottica
EL,
+1.16%

gained 1.8%, after the Franco-Italian optical group said its board of directors have agreed to pay an interim dividend for 2020, due to a business recovery in the second half of the year and successful cost-saving measures.

Shares of CD Projekt slumped 13%, after Sony
6758,
+2.29%

said it would pull the Polish videogame maker’s “Cyberpunk 2077” from its PlayStation store, and offer refunds for the troubled game.

One of the most anticipated videogames in recent years, “Cyberpunk 2077,” has been plagued by problems shortly after its release last week. The company has apologized, offered refunds, and vowed to fix the issues.

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