European shares down as tech stocks drop

The pan-European STOXX 600 index closed 0.8% lower, with tech stocks declining 6.5% in the sector's biggest one-day drop since October 2020

European shares posted their biggest one-day drop in more than two weeks on Tuesday, weighed by technology stocks after chip equipment maker ASML's third-quarter results were leaked and showed a disappointing annual sales forecast.

The pan-European STOXX 600 index closed 0.8% lower, with tech stocks declining 6.5% in the sector's biggest one-day drop since October 2020.

The euro zone blue-chip index slipped 1.8%, its biggest one-day drop in more than two months.

ASML slipped 15.6%, the stock's biggest single day decline since June 1998, after the company reported weak quarterly bookings and cut its 2025 sales forecasts. The news was leaked ahead of its scheduled release on Wednesday.

A lot of investors got carried away on the AI excitement and now we are seeing companies such as ASML looking ahead and finding an equilibrium, said Danni Hewson head of financial analysis at AJ Bell.

There's going to be an awful lot of focus on the other earnings updates of the likes of Nvidia to see whether or not this weakness is replicated in other parts of the sector, Hewson said.

In the U.S. the tech-heavy Nasdaq Composite Index dropped almost 1%.

The STOXX 600 has jumped nearly 8.8% so far this year, but lags the S&P 500 index, which has scored double-digit gains led by AI optimism.

Germany's benchmark index closed 0.1% lower after hitting a record high in the session.

Energy stocks plunged almost 3.3% as oil prices slipped 5% after a media report said Israel will not strike Iran's oil facility, easing fears of supply disruptions.

Investors' key focus for the week is the ECB's monetary policy decision on Thursday. It is widely expected to cut rates further by 25 bps following recent data such as September's bigger-than-expected decline in French inflation and the euro zone's worsening economy.