European stocks slip on Omicron worries, but post best week since March

* Daimler's truck unit spin-off begins trading

* Deliveroo, Just Eat Takeaway slip on draft EU rules

* STOXX 600 end week 2.8% higher

By Anisha Sircar and Susan Mathew

Dec 10 (Reuters) - European stocks fell on Friday on nervousness around the Omicron COVID-19 variant, while U.S. inflation reading coming in broadly in line with expectations did little to allay uncertainty around U.S. monetary policy.

The pan-European STOXX 600 .STOXX slipped 0.3%, down for third straight session, on worries that measures to curb the spread of the Omicron coronavirus variant could hit economic recovery.

But a strong two-day gain at the beginning of the week saw the index post its best weekly gain since March, up 2.8%.

Data on Friday showed U.S. annual consumer prices rose further to 6.8% - the biggest year-on-year rise since June 1982 - following a 6.2% advance in October.

"It looks to be a subdued end to the week... as stocks pause for breath following the big gains in the first half of the week," said Chris Beauchamp, chief market analyst at IG.

"U.S. CPI came in line with expectations, but prices continue to rise, meaning that while the pressure on the Fed to raise rates hasn't increased much as a result of today's data, it doesn't really lessen it either."

On the contrary, news that the European Central Bank is widely considering a temporary increase to its bond purchase plan at a policy meeting next week was seen as a dovish step.

Technology .SX8P and retail .SXRP were the top decliners in Europe on Friday.

"We think the path for equities is lower over the next 12 months," said Milla Savova, European equity strategist at Bank of America.

"Real bond yields will come up from record lows as the Fed turns more hawkish and the market starts to price in a sharper-than-expected Fed hiking cycle."

Auto stocks .SXAP were led higher by Daimler AG DAIGn.DE which rose 2.9% after spun-off Daimler Truck DTGGe.DE climbed in its market debut on the Frankfurt Stock Exchange.

Gains for the sector came even as data showed China's auto sales dropped 9.1% in November, marking their seventh consecutive monthly fall, as a prolonged global shortage of semiconductors disrupted production.

Tobacco group Swedish Match SWMA.ST jumped 7.2% after the Wall Street Journal reported that U.S. Democrats dropped a proposed vaping tax that would have taxed e-cigarettes like regular ones.

Food delivery companies Deliveroo ROO.L and Just Eat Takeaway TKWY.AS slipped 2.4% and 3.2% respectively, adding to losses in the past week on worries that a European Commission ruling on gig economy drivers would hurt profits.

Polish fashion retailer LPP LPPP.WA jumped 10.2% to hit a fresh record high, extending Thursday's rally after strong third-quarter results.
Reporting by Anisha Sircar in Bengaluru; Editing by Sriraj Kalluvila, Maju Samuel and Raissa Kasolowsky

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