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On December 22 1943, German forces discovered a group of transports moving along the Norwegian coast. After long hesitations and intelligence gathering, the Kriegsmarine command was unable to spot the British force screening the convoy, and decided to take the risk and attack.
On December 25 1943, the battleship Scharnhorst, accompanied by the 4th destroyer flotilla with Z-29 as its flagship, took to the sea.
On the morning of December 26, due to a severe storm and mistakes by the German admiral, Scharnhorst was separated from its destroyer escort. The ship stumbled across a British squadron consisting of three cruisers led by HMS Belfast.
The first British salvos took the Germans by complete surprise. Shells from HMS Norfolk knocked out its main radar but Scharnhorst, unwilling to engage cruisers, used its better speed in the stormy conditions to shake off the pursuers, and continued looking for the Allied convoy.
The Vice Admiral Burnett's cruiser squadron returned to protect the transports. Meanwhile, Scharnhorst spent several hours trying to locate the convoy, but without success. Burnett's forces were joined by a destroyer flotilla (HMS Musketeer, HMS Matchless, HMS Opportune, and HMS Virago), but British admirals grew anxious that the enemy might have escaped their trap. However, in the poor weather conditions, the German battleship was effectively blind, while the British radars performed flawlessly. At about 12:00 on December 26, HMS Belfast picked up Scharnhorst on radar again.
In the ensuing skirmish, the battleship gave the British ships a hard time. German 283-mm shells disabled a primary armament turret on HMS Norfolk and inflicted serious damage to its hull. The HMS Sheffield was riddled with heavy shrapnel, while the destroyer Virago was nearly sank after being hit by a salvo from the Scharnhorst's main guns.