Europe’s Stoxx 600 hits two-week low on Middle East escalation, AI jitters

EUROPE’S Stoxx 600 share index slid to a two-week low on Monday (June 8), weighed by escalating tensions in the Middle East and a global selloff in AI stocks, while Italian lender Monte dei Paschi di Siena jumped after a takeover bid from rival Intesa Sanpaolo.

The pan-European Stoxx 600 index fell 0.9 per cent to 616.04 points by 0812 GMT, with all major regional indexes also in the red.

Prices of crude oil, a key resource for energy-deficient Europe jumped more than 4 per cent after Israel and Iran traded fire through the weekend, jeopardising a fragile ceasefire in the region and clouding any hopes for an imminent end to the conflict.

Losses were broad, with energy price-sensitive airlines such as Lufthansa and Air France down over 2 per cent each.

Tech stocks were among top declines, down 2.1 per cent, tracking sharp sectoral losses in the US late last week and also in Asia on Monday.

Infineon slipped 1.7 per cent and BE Semiconductor lost 3.8 per cent. AI equipment makers Legrand and Schneider Electric fell about 2 per cent each.

European tech shares have rallied this quarter, with the sector logging its the biggest quarterly gains among Stoxx 600 sectors so far.

A stronger-than-expected US jobs report has given the Federal Reserve more room to keep interest rates unchanged, with investors also contemplating a December rate hike.

Investors’ focus is now on the rate decision by the European Central Bank, due on Thursday, with markets already pricing in 25-basis-point interest rate hike.

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In M&A news, Italian bank Monte dei Paschi di Siena (MPS) gained 9.5 per cent after Intesa Sanpaolo, Italy’s biggest banking group, announced a 30.6 billion euro (S$45.1 billion) unsolicited cash-and-share bid to buy the rival lender. Intesa slipped 3.2 per cent. REUTERS