UPDATE 1-European stocks slip as new lockdowns overshadow strong business activity

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* Investors look past strong flash PMIs

* EU to extend vaccine export curbs

* Chip stocks jump on Intel’s spending plan (Adds comment, updates prices)

By Sruthi Shankar

March 24 (Reuters) – European stocks slipped on Wednesday, as concerns about new lockdown measures overshadowed a surprise return to economic growth for the euro zone in March.

After falling as much as 0.7% in early morning trading, the pan-European STOXX 600 index was down 0.2%.

Euro zone stocks also cut losses after IHS Markit’s flash composite PMI, seen as a good guide to economic health, bounced above the 50 mark, separating growth from contraction, to 52.5 this month compared to February’s 48.8.

While the data gave investors some relief, a third wave of coronavirus infections and renewed lockdown measures in Europe, as well as a slow vaccine rollout are likely to weigh on the final reading of the survey and April’s numbers.

“We believe this is a pause, not the end of equity rally yet,” said Michele Morganti, equity strategist at Generali Insurance Asset Management.

“COVID management is a bumpy road. We nevertheless think that recovery will be quite strong in the second half of the year.”

The European stocks benchmark has pulled away from a one-year peak hit last week after major economies like Germany and France imposed new lockdowns.

Meanwhile, the European Union is set to extend COVID-19 vaccine export curbs to Britain and other areas with much higher vaccination rates, and to cover instances of companies backloading contracted supplies, EU officials said.

Among individual stocks, Italian defence and aerospace group Leonardo fell 5.6% after it postponed the initial public offering of its U.S. electronics unit DRS

Commerzbank slipped 1.6% after Germany’s No. 2 lender said it expects a net loss for 2021.

Big gains for chipmakers helped limit market losses.

Shares in ASM International, ASML and Infineon Technologies, up between 2% and 5.6%, were the biggest boost to the STOXX 600 after U.S. firm Intel Corp announced a $20 billion plan to expand its advanced chip manufacturing capacity.

French supermarket retailer Carrefour edged up 0.9% after saying it had agreed to buy Brazil’s third biggest food retailer Grupo BIG in a deal that values it at $1.3 billion. (Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur)

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