By Sruthi Shankar and Shreyashi Sanyal
(Reuters) -European stocks hit new highs on Tuesday, lifted by travel and real estate shares, but weak German industrial output data and doubts over Britain lifting restrictions later this month capped gains.
The pan-European STOXX 600 index closed 0.1% higher after notching a record high earlier in the session, with sectors considered more stable such as real estate and telecoms leading gains.
The travel and leisure index rose 1.8%, supported largely by gains in low-cost carrier easyJet (LON:EZJ) after Goldman Sachs (NYSE:GS) upgraded the stock to "buy".
German stocks fell 0.2% after data showed industrial output fell unexpectedly in April, in a further sign that semiconductor shortages and other supply bottlenecks are hampering the recovery in Europe's largest economy.
"The decline in industrial production in April underlines that the German economy was performing well below normal at the start of the second quarter," said Andrew Kenningham, chief Europe economist at Capital Economics.
"The biggest concern is that auto production fell again in April and was 24% below its February 2020 level amid ongoing semiconductor shortages."
Automakers fell 1.1% after a six-day rally that took the index close to its record peak.
Britain's blue-chip FTSE 100 edged higher, boosted by a weaker pound and a 0.4% rise in British American Tobacco (LON:BATS) after it raised its annual revenue growth forecast.
Investor concerns were, however, stoked as The Times reported that Britain's next phase in easing of lockdown on June 21 could be delayed by a fortnight amid concerns over the spreading of new variants of COVID-19.
Global markets were mixed ahead of a policy meeting of the European Central Bank and U.S. inflation data this week.
The ECB is expected to reaffirm its emergency bond purchases programme at the current pace as signs emerge that the euro zone is not recovering as quickly as expected, while the inflation reading would be the last key data ahead of the Federal Reserve meeting next week.
Swiss contract drugmaker Lonza gained 2.3% after Goldman Sachs upgraded the stock to "buy", while German airline Lufthansa fell 2.1% after the brokerage downgraded the stock to "sell".