European shares inched lower as risk appetite took a hit amid surging COVID-19 infections around the world and on worries over the pace of global economic recovery from the pandemic.

The pan-European STOXX 600 fell 1% as of 0815 GMT, with travel stocks leading losses.

The benchmark index, which gained 0.2% in the previous session, is eyeing a rise of 1.3% this week.

New Year celebrations around the world have been called off as the surge in COVID-19 cases casts a gloom over festivities for the second year in a row.

Still, the European benchmark is set to end the year 22.5% higher, with all of the major subsectors on track to close in positive territory.