(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window) Dec 31 (Reuters) - European stocks retreated on Thursday as investors squared positions on the last trading day of the year, while wider coronavirus lockdowns in Britain and news that the United States had raised tariffs on some EU products dampened sentiment. Trading volumes were thin, with many traders away on New Year’s Eve and major European bourses closed. The pan-European STOXX 600 recorded a 3.8% drop in 2020 - lagging Asian and Wall Street equities that traded near record highs - as a rapid surge in coronavirus cases, as well as Brexit concerns weighed on the markets. The German DAX ended 2020 with a 3.5% gain on Wednesday and just below all-time highs, while Italy’s FTSE MIB was down 5.4% for the year. In light trading, UK’s FTSE 100 fell 1.5% and France’s CAC 40 dropped 0.7%. Both markets will close early on Thursday. London markets took a bigger blow as Prime Minister Boris Johnson ordered millions more people to live under the strictest COVID-19 restrictions to counter a new variant. France’s Airbus, Safran and liquor makers Pernod Ricard and Remy Cointreau fell about 1% after the U.S. government said it would raise tariffs on EU products including aircraft components and wines from France and Germany, the latest twist in a 16-year battle over aircraft subsidies between Washington and Brussels. (Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila)