UPDATE 2-Upbeat business activity, vaccine hopes lift European shares

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* Euro zone PMIs top estimates
* Continental jumps, sharply hikes EBIT forecast
* EU could approve COVID-19 vaccine as early as Dec. 23.
* Altice Europe soars 23.3% as Next Private sweetens offer
* Fed meeting outcome at 2pm ET (1900 GMT) eyed

(Updates to close)
By Susan Mathew
Dec 16 (Reuters) - European shares closed higher on
Wednesday on upbeat regional business activity data, rising
hopes of a Brexit trade deal and the possible roll-out of a
COVID-19 vaccine on the continent before the new year.
Rallying for a third straight session, the pan-European
STOXX 600 index .STOXX closed 0.8% higher, having touched a
near 10-month peak during the session.
Flash PMIs for December showed the euro zone economy far
exceeded expectations, with manufacturers reporting strong
growth fuelled by rising exports and a booming performance from
Germany. However, the region's largest economy headed into a
stricter lockdown on Wednesday. "The resilience of the economy ahead of stricter measures is
an important positive take away in very uncertain times," said
Bert Colijn, senior economist, eurozone at ING.
Colijn warned that "the worst could still be to come" as new
curbs take effect.
But hopes for an end to the pandemic buoyed sentiment, as a
European Commission official said the EU could give final
approval for the Pfizer-BioNTech COVID-19 vaccine as early as
Dec. 23. The bloc's medical regulator has moved forward its
meeting following approvals in Britain and the United States.
On the Brexit front, continuing talks saw markets hold out
hope for a deal, but the two sides still struggled to compromise
on fishing, Ireland's state broadcaster RTE said.
London's FTSE 100 .FTSE weathered a higher pound GBP= to
rise 0.9% and break a three session losing run. .L
While most sectors in Europe rose, banks .SX7P slid 1.1%,
reversing some of the previous two sessions' almost 3% gain.
Spain's lender-heavy IBEX .IBEX ended in the red.
Auto stocks .SXAP hit a near three-month high with German
tire maker Continental CONG.DE surging 2.9% after it sharply
raised it its medium term forecast for earnings before interest
and taxes. The German DAX stock index .GDAXI posted its best session
in three months, up 1.5%.
Investors will also be watching the U.S. Federal Reserve's
policy decision, with markets focused on its bond-buying plans
and any details on how the vaccine roll-out has changed the
economic outlook. The decision is due at 2 p.m. ET (1900 GMT).
Among individual stocks, Biotech firm Galapagos NV GLPG.AS
skidded to the bottom of the STOXX 600 after its partner for
experimental rheumatoid arthritis treatment, Gilead Sciences
GILD.O , decided not to pursue U.S. approval for the drug.

Topping the index was a 23.3% jump in Altice Europe
ATCA.AS after its founder increased an offer to take the
telecoms group private by 30%.