European shares set for weekly fall as tech optimism wanes, US-Iran tensions resurface

European shares were little changed on Friday, with losses in technology stocks offsetting broader gains, as investors assessed renewed Middle East tensions.

European shares were little changed on Friday as ‌losses in technology stocks offset broader gains, while investors assessed renewed Middle East tensions that put the benchmark on track for a weekly decline. The pan-European STOXX 600 edged 0.1% lower to 640.28 points by 0849 GMT and was on track to snap a four-week winning streak.

Technology stocks weakened this ‌week on concerns their high valuations may be hard to sustain after a sharp rally, while renewed Middle East tensions after U.S. President ‌Donald Trump said the interim deal with Iran was over further weighed on risk appetite. The technology sector was off 1.3% on Friday, as investors continued to book profits ahead of South Korean chipmaker SK Hynix's U.S. debut, following a $26.5 billion share sale.

Soitec dropped 3.3%, BE Semiconductor fell 1.6% and ASML 2.3%. "The large swings we're seeing in technology stocks... suggest investors ⁠remain under ​stress amid elevated valuations," said said Ipek ⁠Ozkardeskaya, senior market analyst, Swissquote Bank.

"Attention is now turning to SK Hynix's U.S. debut, which could help gauge broader appetite for AI-related stocks and influence sentiment across the sector." However, ⁠most sectors on the STOXX 600 were higher with telecoms stocks leading gains with a 1.4% climb, lifted by a near 11% jump in Vodafone after UAE ​telecoms group E& said it would sell its stake to the family group of French billionaire Xavier Niel.

Travel and leisure stocks advanced ⁠0.8%, with airlines largely higher. UK's EasyJet surged 14% after agreed in principle to a 5.7 billion pounds ($7.65 billion) takeover approach from Apollo Global. On the geopolitical front, Iranian forces attacked ⁠U.S. military ​infrastructure in Gulf states, further weakening a three-week-old ceasefire, and plunging markets into uncertainty over the conclusion of the conflict.

The state of energy shipping through the vital Strait of Hormuz is back in the limelight, especially for energy import-reliant regions like Europe, where inflation concerns could re-emerge and ⁠cloud the path of economic growth and monetary policy. Among other stocks, St. James's Palce bottomed the STOXX 600 with a 8.5% fall after ⁠a report said Sovereign Wealth, ones of ⁠the money manager's largest partner firms was in talks to join a Swedish wealth group.

J.P. Morgan turned 'constructive' on the European steel sector, and upgraded ArcelorMittal to "neutral" from "underweight", sending its shares up 5%. Voestalpine and Salzgitter gained ‌6% and 10.3% respectively ‌after a double upgrade to "overweight" from "underweight".