By Ankika Biswas

(Reuters) – Europe's STOXX 600 was slightly down at the start of a holiday-shortened week, following its steepest weekly drop since early September. However, a spike in Novo Nordisk (NYSE:NVO) shares boosted the healthcare sector and capped losses on the main stock index.

As of 0850 GMT, the pan-European STOXX 600 was down 0.1% amid a light event calendar, with low trading volumes expected ahead of the Christmas break.

Leading sectoral declines, travel and leisure fell nearly 2%, impacted by a 10% slide in Swedish online gaming company Evolution. Media also suffered, down 1%.

Conversely, Novo Nordisk soared 9.2%, contributing to a 1.4% increase in the healthcare sub-index. This surge followed the drugmaker's disappointing results for its experimental obesity drug CagriSema, which had erased as much as $125 billion off its market value on Friday, down nearly 21%. However, the U.S. Food and Drug Administration approved Novo Nordisk's bleeding disorder drug Alhemo.

Volkswagen (ETR:VOWG_p) declined 1.2%, negating early gains after the automaker reached a deal with unions after extended negotiations.

Direct Line (LON:DLGD) saw a 3% rise following news of British insurer Aviva’s plans to acquire the company in a £3.7 billion ($4.65 billion) cash-and-stock deal.

Meanwhile, European Central Bank (ECB) President Christine Lagarde stated that the euro zone was getting "very close" to reaching 2% inflation, as mentioned in a Financial Times interview. Lagarde opposed retaliation by Europe to tariff threats from incoming U.S. President Donald Trump, a concern that has weighed on the bloc's risk assets amid a deteriorating economic outlook.

The STOXX 600 has up only around 5% for the year, falling behind a 24% jump in the S&P 500. Trump's tariff comments unsettled investors, contributing to last Friday's sharp equity fall, compounded by the Federal Reserve's projections of fewer rate cuts in 2025, which dampened investor sentiment.

A Deutsche Bank (ETR:DBKGn) note remarked, "Equities had already rallied into the (first ECB rate) cut, as the anticipated recession never materialized. After six months of largely flat equity markets with faster cuts by the ECB becoming likely, there’s reason to be positive on European equities into 2025."

Additionally, Spain's GDP grew 0.8% in the third quarter, whereas Britain's economy failed to grow, contributing to signs of a slowdown that cast a shadow over Prime Minister Keir Starmer's new government. Spain and the UK’s main stock indexes fell by 0.4% and 0.2%, respectively.