The pan-European STOXX 600 index fell 0.3% after hovering near record highs earlier in the session. The index ended the week 0.1% lower.
It lost ground after news that Austria will become the first country in western Europe to reimpose a full COVID-19 lockdown this autumn to tackle a new wave of infections.
Germany’s Health Minister Jens Spahn said the coronavirus situation in the country was so grave that a lockdown, including for people who have been vaccinated, cannot be ruled out.
“Any thoughts that the vaccines would offer a way to a more normal Christmas period appear to have gone up in smoke for now, in Europe at least, although there is a nagging fear this could ripple out across the region,” said Michael Hewson, chief market analyst at CMC Markets.
Frankfurt shares fell 0.4%, while sectors more exposed to economic cycles such as banks, automakers and travel & leisure fell between 1.5% and 2.2%.
South European markets, including those in Spain and Italy, fell about 1.5% each.
European stocks have hit a series of record highs this month as a stronger-than-expected earnings season helped investors look past concerns about rising inflationary pressures.
European Central Bank President Christine Lagarde said inflation in the euro zone will fade so the ECB should not tighten policy as it could choke off the recovery, and hinted at continued bond purchases next year.