FRANKFURT: Hopes of a Covid-19 vaccine pulled European stocks from losses earlier on Wednesday, after fears of a no-deal Brexit and anxieties relating to the European Union's recovery fund had weighed on sentiment.

Ending a choppy session, the pan-European STOXX 600 index rose 0.2%, with blue-chip indexes in Paris, Milan and London down about 0.2%

Markets on both sides of the Atlantic got a boost as a COVID-19 vaccine developed by Pfizer Inc and German biotech firm BioNTech showed promise and was found to be well tolerated in early-stage human trials.

The STOXX 600 shed more than 1% in afternoon trading as German Chancellor Angela Merkel warned that there was a possibility that no deal would be agreed between the European Union and Britain, with "very limited" progress made in negotiations about their future relationship. This comes as rating agency S&P Global cut its UK forecasts for the year again and warned of a possible "perfect storm" formed by a second wave of coronavirus infections and a no-deal Brexit.

Investors were also anxious about the European Union member states approving a 750 billion euro recovery fund at a summit later this month.

Morning trading in some European markets, including Germany's DAX and Austria, was hit by a "technical issue" with the Frankfurt-based cash market system Xetra, exchange operator Deutsche Boerse said.

After a nearly three-hour outage, the DAX was down 0.4% and the Austrian index rose 0.3%.

Among individual stocks, Swiss speciality chemicals maker Clariant jumped 7% as it completed the $1.6 billion sale of its masterbatches unit to PolyOne Corp, allowing the payment of a special dividend amounting to $3 per share.

Energy firms such as BP and Royal Dutch Shell rebounded from losses in the previous session as oil prices rose after a report showed US crude stockpiles posted a bigger drop than expected. Travel & leisure stocks were the top gainers.