European shares steady as tech gains offset Middle East caution

By Johann M Cherian and Tharuniyaa Lakshmi

June 29 (Reuters) – European shares were steady on Monday, underpinned by gains in technology stocks, while investors mulled over the durability of an interim ceasefire in the Middle East after the ​United States and Iran agreed to halt the latest bout of hostilities.

The ‌pan-European STOXX 600 index was steady at 636.43 points by 0800 GMT, with technology stocks leading sectoral gains with a 1.4% rise.

Nagarro soared 91% after India’s Persistent offered €81 per share to acquire the AI-led digital engineering firm.

The broader tech sector rose after last week’s selloff, when it posted its biggest ‌weekly ​fall since mid-March. Chip stocks such as Soitec jumped ⁠7.2%, STMicroelectronics added 3.6%.

Europe’s exposure to ⁠AI stocks is much smaller than the U.S. and Asia, where tech-driven rallies pushed regional benchmarks to record highs several weeks earlier.

“For us to start upgrading European stocks, we need to start seeing AI-driven productivity have an impact on European ​earnings. So far, we’re not there yet,” said Florian Ielpo, head of macro and multi-asset portfolio manager at Lombard Odier Investment.

Still, the European tech sector has benefitted ⁠from the global AI rally, putting it on ⁠track for the biggest quarterly gains on the STOXX 600. It ​also outperforms the U.S. S&P 500 tech sector at a time when worries about debt-backed ​spending concerns weigh on Asian and Wall Street stocks.

Meanwhile, crude prices edged ‌up 0.2% to $72 a barrel as investors assessed shipments through the Strait of Hormuz, with a tenuous interim ceasefire prevailing between the U.S. and Iran. The countries traded fire through the weekend before agreeing to halt hostilities and renew talks.

The truce has prompted bullish ⁠outlooks from brokerages. J.P. Morgan was the latest to lift its year-end target for European equities.

Focus will be on the European Central Bank’s Sintra conference, where speakers include Federal ⁠Reserve Chair Kevin Warsh and ‌ECB President Christine Lagarde.

Traders are pricing in one more ECB ⁠rate hike of 25 basis points later this year, LSEG-compiled data ​showed.

British ‌American Tobacco said it will cut 5,500 jobs globally as ​it pushes ahead ⁠with its AI-driven transformation programme. Shares were down 1.4% in early trading.

Dutch tech investor Prosus gained 2.9% after reporting an 84% rise in full-year adjusted core profit.

Private equity firm Bridgepoint rose 9.3% after agreeing to acquire U.S. real estate investment platform Kayne Anderson Real Estate for an enterprise value of $1.39 billion.

(Reporting by Johann M Cherian and Tharuniyaa Lakshmi Bengaluru; ​Editing by Eileen Soreng)