By Sagarika Jaisinghani
(Reuters) - European shares steadied on Wednesday after tumbling in the previous session due to a pause in a COVID-19 vaccine trial and on concerns about more lockdowns, although investors stayed away from big bets ahead of talks on a Brexit trade deal.
The pan-European STOXX 600 index was flat by 0746 GMT, recovering from its first fall in four days.
Early gains in auto (SXAP), banking (SX7P) and technology (SX8P) stocks were offset by a slide in the travel and leisure (SXTP) and energy (SXEP) sectors.
Hopes of more stimulus to help businesses ride out the COVID-19 pandemic helped European shares track gains in global equities in the past few weeks, but prospects of more lockdowns and signs of a delay in a vaccine have since dented sentiment.
Italian Prime Minister Giuseppe Conte on Tuesday imposed new restrictions on gatherings, restaurants, sports and school activities.
"There is still hope that targeted restrictions might be able to contain the spread of the virus," said Commerzbank (DE:CBKG) analyst Thu Lan Nguyen.
"If infection trends were to continue this hope will start to dwindle though (and) it would look to the market as if the U.S. was handling the pandemic better after all."
Although trading in most country indexes was muted, a weaker pound lifted London's FTSE 100 (FTSE) by 0.4% ahead of a UK-imposed Oct. 15 deadline on Brexit negotiations. Growing political friction about the impact of new local COVID-19 restrictions has also hit sentiment.
The European Union would prefer to have a Brexit trade deal, but it is ready in case no agreement can be reached, the Commissioner for the EU's single market said.
Focus later in the day will be on euro zone industrial production data for August, which is expected to show an increase of 0.8% month-on-month following a 4.1% gain in July.
In company news, Italy's Atlantia (MI:ATL) jumped 9.1% to the top of the STOXX 600 after entering exclusive talks until Oct. 18 with state lender Cassa Despositi e Prestiti over the sale of the group's motorway assets.
The UK's Bunzl Plc (L:BNZL) rose 5.5% as it said it expected a slightly higher operating profit margin and stronger revenue growth in the second half of the year.
Overall, third-quarter earnings at STOXX 600 firms are expected to have declined by 36.7% year-on-year, smaller than a 50.8% plunge in the second quarter, according to data from Refinitiv.