By Anisha Sircar

(Reuters) – European stock markets lost early gains Friday due to concerns about the economic impact of fresh COVID-19 lockdowns within the region. This hampered cyclical sector such as banks, automakers and other financial institutions.

After reaching near-record highs in the previous session, pan-European indicators fell by 0.3%.

The news that Austria, the first Western European country to reinstate a COVID-19 lockdown for this fall to deal with a new round of infection caused by the virus, slowed it down.

Jens Spahn from Germany, the Health Minister said that coronavirus was in such a dire state that there is no way to prevent it.

Frankfurt shares fell 0.4%, while sectors more exposed to economic cycles such as banks, automakers and travel & leisure fell between 1.4% and 2.8%.

South European markets, which include those in Spain or Italy, experienced a more severe drop than 1%.

Capital Economics’ Thomas Mathews, a market economist at Capital Economics said that COVID-19 has been getting more severe in Europe. However, the virus is having fewer effects on the stock markets than the initial wave. Treatments are improving and vaccines continue to roll out.

However, if conditions worsen or a large part of the economic system goes into lockdown then it may start to affect regional stock market.

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.

Christine Lagarde, President of the European Central Bank said that inflation will recede in the Euro zone so the ECB shouldn’t tighten its policy. It could choke off recovery. She also hinted at continuing bond purchases next year.

At its December 16 policy meeting, the ECB will decide how to proceed with its bond-purchase programs.

Ryanair, an Irish airline, dropped 2.6% following its announcement of intention to withdraw from the London Stock Exchange. The company cited costs associated with retaining an additional listing.

French luxury brand Hermes rose 5.1% after jumping above 6% during the previous session on market talk that the company may be added the Eurostoxx 50 in December.

Analysts expect a credit rating upgrade because of better macro trends. Moody’s (NYSE) is also in the spotlight. The main Athens stock market has risen by 15% thanks to a wider rebound in the economy.