UPDATE 2-European stocks break 4-day rally on Brexit trade talks, U.S. stimulus doubts

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* German business morale rises in December
* Finland's Tikkurila soars after PPG offer
* IAG slips, to buy Air Europa for 500 mln euros

(Updates to close)
By Sruthi Shankar and Susan Mathew
Dec 18 (Reuters) - European shares fell on Friday as doubts
over a post-Brexit trade deal and a stimulus package in the
United States capped gains at the end of a solid week.
The pan-European STOXX 600 index .STOXX broke a four-day
rally to end 0.4% lower, reversing gains that followed a
surprise rise in German business morale in December.
The German DAX .GDAXI gave up gains of as much as 0.8% to
end in the red. The Ifo institute's upbeat data came even as
Europe's biggest economy went into a strict lockdown to contain
a second wave of coronavirus infections. Britain's exporter-heavy index .FTSE lost 0.3%, despite a
weaker pound after Britain and the European Union said they
remained far apart on a number of issues and that it was
becoming more likely they would fail to reach a trade agreement
before a Dec. 31 deadline. .L
"This is the real final crunch time, so that will likely
effect the markets in a broader sense rather than just the pound
play," said Connor Campbell, a financial analyst at Spreadex.
In the United States, Congress looked increasingly unlikely
to meet a deadline to agree on $900 billion in fresh COVID-19
aid and instead may pass a third stopgap spending bill to keep
the government from shutting down at midnight. "Markets are heading into the weekend with these two big
unknowns. Investors may not get to react until Monday morning
because the answer, especially for Brexit, might be between
Sunday and Monday morning," Campbell said.
The STOXX 600 ended the week with a 1.5% gain, its sixth
week in the black in seven.
Optimism around vaccine rollouts in Britain and potential
roll outs in other part of Europe before the year-end, as well
as progress in U.S. stimulus talks underpinning hopes of a
global economic recovery, lifted sentiment this week.
Travel & leisure stocks .SXTP slipped on Friday, with
British Airways-owner IAG ICAG.L down 2.1% after a media
report that it had agreed to buy Spanish carrier Air Europa for
500 million euros ($612.55 million). In M&A moves, Dutch health technology firm Philips PHG.AS
rose 1.7% after it agreed to buy U.S. cardiac diagnostics and
monitoring firm BioTelemetry BEAT.O in a deal worth $2.8
billion. Finnish paint producer Tikkurila TIK1V.HE soared more than
60% after U.S. firm PPG Industries PPG.N made an offer to buy
the company for a total of 1.1 billion euros ($1.35 billion).