European stocks were set to end the week on a cautious note as the prospect of tighter lockdowns in Germany and France as well as new COVID-19 restrictions in China cut into optimism about a global economic recovery.

The pan-European STOXX 600 index fell 0.5% by 0804 GMT, set to end the week marginally lower.

German Chancellor Angela Merkel wants "very fast action" after the country saw a record number of deaths from the coronavirus, while French government said it will strengthen its border controls from Monday and impose an earlier curfew from Saturday to curb the spread.

The German DAX was down 0.5% and France's CAC 40 fell 0.6%. UK's FTSE 100 also declined 0.6% despite data showing that Britain's economy recorded a smaller-than-expected contraction in November.

US president-elect Joe Biden outlined a $1.9 trillion stimulus package proposal on Thursday, but failed to excite markets that had rallied in anticipation of the announcement.

In company news, German business software group SAP rose 0.9% after it released preliminary annual results that came at the high end of guidance, but forecast a decline in operating profit in 2021.

Siemens Energy AG fell 5.3% after General Electric Co accused a subsidiary of the power distribution company of using stolen trade secrets to rig bids for lucrative contracts.