European shares slip on tech selloff

The pan-European STOXX 600 index closed about 0.7 per cent down at 646.29

European shares slipped on ​Tuesday, weighed down by a worldwide selloff in tech stocks, while investors monitored the latest developments ‌for clues on which sectors could emerge as beneficiaries of increased spending.

The pan-European STOXX 600 index closed about 0.7 per cent down at 646.29. The index had hit a record high on Monday, before settling lower.

After recovering from the shock triggered by the Middle ​East war, European equities have traded in a narrow range this week as investors await new cues from ​the earnings season and the latest international developments.

Still, defence stocks slipped 2.5 per cent, while tech shares dropped 3.6 per cent on concerns that a quarter-long rally in chip stocks had ​overvalued the sector. Chip equipment maker ASML fell 7.3 per cent.

South Korea’s Samsung Electronics set the tone for the worldwide ​tech selloff, with shares sliding despite strong forecasts, while the U.S. Nasdaq index slipped nearly 0.7 per cent.

It’s part of ‌a rotation ⁠to cheaper, less-loved, less tech-heavy sectors of the market. We’re seeing much more of a broadening out rather than leadership from a narrow group of stocks, said Kathleen Brooks, research director at brokerage XTB.

However, the moves point to a market taking a breather after a strong run, rather than a broader loss of confidence, ​according to David Morrison, senior ​market analyst at Trade ⁠Nation.

Market sentiment remains constructive. Falling energy prices, softer euro zone inflation data and signs of cooling labour market conditions in the United States have helped support risk ​assets, he said.