By Sruthi Shankar and Susan Mathew

(Reuters) -European stocks ended a volatile session lower on Wednesday after marking their strongest two-day gain in more than a year, with tech and luxury stocks reversing strong gains as investors pitted vaccine reassurances against COVID-19 curbs.

After jumping 3.8% over the past two days, the region-wide STOXX 600 index closed down 0.6%.

While defensive buying kept it buoyed in morning trade, worries about the effectiveness of existing vaccines against the Omicron COVID-19 variant and possibilities of tougher restrictions this week in Britain weighed on sentiment.

The index got some respite when BioNTech and Pfizer said a three-shot course of their COVID-19 vaccine was able to neutralise the Omicron variant in a laboratory test.

That lifted travel and leisure stocks, with online gambling company Evolution jumping 7.3%, cruise operator Carnival adding 4% and holiday firm TUI rising 2%, even as it reported an annual operating loss of over 2 billion euros.

U.S. investment bank JP Morgan predicted on Wednesday that 2022 will mark the end of the pandemic and see a full global economic recovery.

“European equities are in a sweet spot,” said State Street Global Advisors in a 2022 outlook note.

“European stocks offer attractive valuations relative to their U.S. counterparts… (and) currently boast the strongest earnings and growth expectations across developed markets.”

Healthcare stocks, among those considered more stable during times of economic uncertainty, also gained.

However, chipmakers ASML and Infineon, and luxury stocks Louis Vuitton-owner LVMH, Hermes and Gucci-parent Kering fell between 1.4% and 4.6%, weighing the most on STOXX 600.

A recent rally has seen the STOXX 600 recover all losses that were driven by the detection of the Omicron variant on Nov. 26, with the index now just 3% below its all-time high.

U.S. inflation data on Friday and a slew of major central bank meetings next week could set the tone for financial markets, as investors try to gauge when policymakers will start withdrawing pandemic-era stimulus.

Shares in Nestle SA rose 1.6% to hit an all-time high, boosting the Swiss index to fresh peaks, after the company trimmed its stake in French beauty giant L’Oreal.

Volkswagen slipped 0.3% after it said tight chip supply would continue to pose challenges to Europe’s largest carmaker during at least the first half of 2022.

Meal-kit company Hellofresh slid 10.9% after an underwhelming 2022 earnings outlook, while chemicals and recycling company Umicore dropped 9% on cutting its outlook for the second time in three months.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Uttaresh.V, Devika Syamnath and Ramakrishnan M.)