Austria yesterday became the first country in western Europe to reimpose lockdown since vaccines were rolled out, shutting non-essential shops, bars and cafes as surging caseloads raised the prospect of a third winter in deep freeze for the continent.

Germany will also need tighter restrictions to control a record-setting wave of infections, outgoing Chancellor Angela Merkel was quoted as saying, remarks that erased gains on European stock markets and sent bond yields down.

With Europe once again the epicentre of the global pandemic, new restrictions and vaccine mandates are expected to spread nearly two years after the first Covid-19 case was identified in China.

"We are in a highly dramatic situation. What is in place now is not sufficient," Merkel told leaders of her German CDU party in a meeting, according to two participants, confirming comments first reported by Bloomberg.

Austria told people to work from home if they can, and shut cafes, restaurants, bars, theatres and non-essential shops for 10 days. People may leave home for a limited number of reasons, such as going to workplaces, buying essentials or taking a walk, reports Reuters.

The Austrian government has also announced it will make it compulsory to get inoculated as of February 1. Many Austrians are sceptical about vaccinations, a view encouraged by the far-right Freedom Party, the third biggest in parliament.

"It's like a luxury prison. It's definitely limited freedom and for me it's not great psychologically," said Sascha Iamkovyi, a 43-year-old entrepreneur in the food sector, describing his return to lockdown on a chilly, overcast day in an unusually quiet Vienna.

"People were promised that if they got vaccinated they would be able to lead a normal life, but now that's not true."

As Europe grapples with new Covid spikes, Australia announced yesterday it will re-open to foreign students and skilled workers from next month, easing some of the world's most stringent pandemic travel restrictions.

Twenty months after Australia slammed shut its borders, some visa holders -- as well as Japanese and South Korean citizens -- will be able to enter from December 1, reports AFP.

"Australia is re-opening to the world," said Home Affairs Minister Karen Andrews as she announced the news, adding it was "yet another step forward for Australia".

In Austria, the return of severe government restrictions had already brought about 40,000 protesters to Vienna's streets on Saturday, and protests turned to violence in Brussels and across the Netherlands over the weekend.

The Czech Republic and Slovakia banned unvaccinated people from services including pubs from yesterday.

Around a third of Austrians are unvaccinated, one of the highest rates in western Europe, and authorities mainly blame the unvaccinated for the current Covid wave, though protection from vaccines given early this year is also waning. Inoculation greatly reduces the risk of serious illness or death, and reduces but does not prevent viral transmission or re-infection.