European shares were subdued on Wednesday as gains in technology stocks following strong forecasts from chip equipment maker ASML were overshadowed by caution over escalating tensions in the Middle East.
The pan-European STOXX 600 index slipped 0.1% to 641.07 points by 0709 GMT, with most sectors in the red.
Technology stocks rose 1.4%, led by ASML's 6% rise after raising its financial forecasts for 2026, reassuring investors about the strength of AI-driven demand.
Chip-related stocks ASM and Soitec also added more than 2% each.
The results came after recent jitters over whether lofty expectations surrounding the AI boom could be sustained, following a strong rally in the second quarter.
Investors this year have also been reducing their exposure to sectors that could potentially be losers from the AI boom, among which are software companies.
Germany's benchmark lagged regional peers, down nearly 1%, weighed by software company SAP's 2% drop. Other software companies such as Dassault Systemes and Capgemini lost over 1% each as well.
Among others, Cartier brand owner Richemont gained 5.3% after reporting better-than-expected results for its first quarter, helped by booming demand for its jewellery in Asia and the Americas.
Investors are scrutinising quarterly results and forecasts at a time when oil prices have risen to $85 a barrel on intensifying Iran-U.S. tensions, with Tehran shutting the crucial Strait of Hormuz.
(Reporting by Tharuniyaa Lakshmi and Johann M Cherian in Bengaluru; Editing by Janane Venkatraman)
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