European Shares Rise Amid Defensive Gains, Await U.S. Payroll Data

European shares increased as defensive stocks overcame declines in AI-related stocks, with investors looking to the U.S. employment report for interest rate clues. The STOXX 600 index gained 0.2%, despite tech sector declines. Analysts predict a broader rally beyond tech stocks amid easing oil prices and policy support.

European shares edged up on Thursday as strength in defensive sectors countered a decline in AI-related stocks. Investors are closely watching a critical U.S. employment report for insights on future interest rate decisions.

By 0756 GMT, the pan-European STOXX 600 index had gained 0.2% to reach 640.70 points, with sectors like food, personal goods, and healthcare leading the way. Meanwhile, the STOXX 600 technology index dropped 2%, following steep losses in AI-linked stocks such as Soitec and Aixtron, which fell 4.5% and 5.1%, respectively.

Analysts suggest that although tech stocks have rallied strongly, the market's focus might broaden to other sectors as oil prices decline and structural growth hot spots emerge, according to UBS. Meanwhile, traders anticipate at least a further 25 basis point rate hike by the European Central Bank this year.