By Nikhil Sharma
(Reuters) -European shares advanced on Tuesday, as gains in defence stocks outweighed technology losses spurred by concerns over U.S. chip curbs on China.
The pan-European STOXX 600 index rose 0.3% by 0930 GMT.
The European aerospace and defence index jumped 1.3%, with traders pointing to a Bloomberg report saying Germany was discussing 200 billion euros for emergency defence fund.
Shares of German arms makers Hensoldt, Rheinmetall and Renk jumped 2.9%, 3.1% and 7.1%, respectively.
“It’s likely that Germany now will become definitely way more serious about their obligations also within the European context,” said Teeuwe Mevissen, senior market economist at Rabobank.
Healthcare stocks led the gains with a rise of 1.4%, boosted by a 5% jump in index heavyweight Novo Nordisk.
Also helping the sub-index was medical products maker Smith+Nephew, which advanced 6% after annual sales and profit beat analysts’ expectations.
On the downside, the technology index fell 1.2%.
A Bloomberg report said U.S. President Donald Trump’s administration was planning to toughen semiconductor restrictions on China, continuing and expanding the Biden administration’s efforts to limit Beijing’s technological prowess.
Semiconductor stocks STMicroelectronics and ASML Holding fell 1.2% and 2.7%, respectively.
Meanwhile, artificial intelligence-exposed stocks such as Schneider Electric and Siemens Energy shed 1.2% and 1.8%, respectively.
In Germany, the economy shrank by 0.2% in the final quarter of 2024 compared with the previous quarter, confirming a preliminary reading.
The German blue-chip stock index was trading flat after robust gains in the previous session following the victory of Friedrich Merz-led conservatives in the national election.
Developments surrounding the Ukraine-Russia peace talks also hit the headlines after the United Nations Security Council on Monday adopted a U.S.-drafted resolution that takes a neutral position on the conflict.
“There are huge amounts of uncertainty. We have seen the Trump administration making 180° (shift) regarding how they see the Ukrainian conflict,” said Rabobank’s Mevissen.
Among other stocks, SIG Group dropped 12.5% to become the biggest loser on STOXX 600 after the Swiss packaging company reported annual results.
Unilever fell 1.6% after the consumer goods giant said CEO Hein Schumacher would step down and be replaced by finance chief Fernando Fernandez.
Shares of Galp Energia rose 8% to trade at the top of STOXX 600 index after the company confirmed a new exploration discovery in its Mopane-3X well offshore Namibia.
($1 = 0.9549 euros)
(Reporting by Nikhil Sharma; Editing by Janane Venkatraman and Subhranshu Sahu)
