European shares slip as tech rally stalls, Middle East uncertainty weighs

By Johann M Cherian, Utkarsh Hathi and Ragini Mathur

European shares slipped on Friday and ended the week lower, as uncertainty about Middle East peace efforts kept investors on edge and technology stocks paused after a blistering two-month rally.

The pan-European STOXX 600 index was down 0.3% at 622.66 points and lost 0.5% for the week.

Brent crude fell for a second straight session, though prices remained near $93 a barrel. Hopes for a diplomatic breakthrough between the U.S. and Iran appeared limited after the two countries exchanged strikes earlier in the week, while a U.S.-brokered Israel-Lebanon ceasefire also looked fragile after Hezbollah rejected the pact.

The resulting spike in energy costs has complicated the inflation outlook. Data this week showed euro zone inflation accelerated in May, prompting markets to price in a 25-basis-point interest rate hike from the European Central Bank next week.

"A hike is consistent with the data," said a group of analysts at Deutsche Bank led by Mark Wall, in a note.

"A U.S.-Iran deal would not prevent it. After three months of elevated energy prices, the ECB sees some indirect inflation as inevitable."

U.S. JOBS DATA EYED

Sentiment was also dented by stronger-than-expected U.S. jobs data, which showed employers added far more positions than forecast in May. The figures reinforced expectations that the U.S. Federal Reserve could raise interest rates later this year, adding pressure to global equities.

Technology stocks were among the top sectoral decliners with a 2.9% drop, following a rally that has helped the shares gain about 30% in the past two months - the most among STOXX 600 sectors.

The pullback echoed a broader pause in global technology shares this week after disappointing results from U.S. chipmaker Broadcom.

European chip stocks such as Infineon and Aixtron lost 9.1% and 4.8%, respectively, while AI equipment makers Legrand and Schneider Electric slipped 2.3% and 4.5%, respectively.

Earlier this week, the European Commission proposed laws to boost domestic cloud, AI and semiconductor industries and cut reliance on U.S. Big Tech, called the Cloud and AI Development Act and Chips Act 2.0.

"Tech is coming to Europe and will almost certainly be a story for the latter years or so of the current decade and the early years of the 2030s," said Jeremy Batstone-Carr, European strategist at Raymond James.

The financial services sector was heading for a 0.8% weekly loss after rising redemption requests from asset managers reignited concerns about strains in private markets.

Among other stocks, thermal processing services company Bodycote slid 13% after saying Apollo Global Management does not intend to make the firm a buyout offer.

Single-board computing company Raspberry Pi jumped 27.6%, hitting a record high, after raising its full-year profit forecast.

(Reporting by Utkarsh Hathi, Johann M Cherian and Ragini Mathur in Bengaluru; Editing by Mrigank Dhaniwala, Eileen Soreng, Rod Nickel)

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This story was originally published June 5, 2026 at 9:31 AM.