UPDATE 2-European shares end slightly higher ahead of Christmas holiday

(There will be no European equities report on Dec. 25 because of the Christmas holiday; Reuters will resume coverage from Dec. 26)

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Prosus, Ubisoft drop on China's curb on gaming spend

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Adidas, Puma drop on Nike's outlook cut

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Argenx rebounds after recent slide

(Updated at 1656 GMT)

By Khushi Singh, Ankika Biswas and Sruthi Shankar

Dec 22 (Reuters) - European stocks closed with a whimper on Friday, as softer-than-expected U.S. inflation data offset losses in sportwear makers and China-exposed stocks ahead of the Christmas holiday weekend.

The pan-European STOXX 600 index edged up 0.1% and notched its sixth week of gains in a row - a winning streak that was last seen in December 2022.

However, trading volumes were thinner than usual as traders prepared to break for the holiday season. European markets will be shut on Monday for Christmas.

Investors drew comfort from data that showed U.S. prices fell in November for the first in more than 3-1/2 years, pushing the annual increase in inflation further below 3%, and boosting financial market expectations of an interest rate cut from the Federal Reserve next March.

Traders are also betting on rate cuts by the European Central Bank early next year despite attempts by policymakers to manage those expectations.

"We started 2023 on a pretty pessimistic footing, with still-stubborn inflation, a hawkish ECB and coming out of a winter with concerns regarding European energy supplies and whether the EU was heading for a deep recession," said Stuart Cole, chief macro economist at Equiti Capital.

"But as we have gone through 2023, things have not turned out to be quite as bad as feared. The battle with CPI has been mostly won, and if the ECB can start cutting next year, hopefully the downturn will not be too deep."

Meanwhile, the ripple effect of Chinese regulators launching rules aimed at curbing spending on video games was seen across global markets.

Dutch tech investor Prosus, which has stake in Chinese gaming company Tencent, tumbled 13.4% to post its biggest one-day percentage fall in more than a year.

French video games developer Ubisoft slipped 1.5%.

Sportswear companies were also a drag on European indexes after U.S. giant Nike cut its annual sales forecast, largely blaming cautious consumer spending.

Germany's Adidas and Puma fell 5.3% and 7.2%, respectively, while UK-listed JD Sports dropped 5.1%.

The STOXX 600 is set to end 2023 with a 12.4% jump as bets of lower interest rates increased following evidence of cooling inflation and slowing economic growth.

Euro zone data showed Spain's third-quarter gross domestic product growth slowed slightly, while another set showed Germany's third-quarter residential property prices dropped 10.2% in a further grim sign for the real estate sector.

Argenx rebounded 12.8% following a 28% slide in two days after its auto-immune drug failed a study testing it in patients with two skin conditions. (Reporting by Khushi Singh, Ankika Biswas and Sruthi Shankar in Bengaluru; Editing by Dhanya Ann Thoppil, Sonia Cheema and Barbara Lewis)