Tech slump drives European shares to seven week low

European stocks were hit on Monday by big falls in Apple suppliers and other tech shares, overshadowing well-received election results in France and Italy. Shares in chipmakers STMicro, Dialog and AMS all fell between 6.7 percent to 9.2 percent following heavy losses in US and Asian peers. Apple's worst drop in 14 months on Wall Street on Friday sparked a bout of profit-taking across richly valued tech stocks that have soared to record highs.
"It's really hard to say whether this counter-rotation can be considered the start of something structural or just a natural correction," Alessandro Balsotti, Head of Asset Management at JCI Capital, said. Europe's tech index fell 3.6 percent, leading sectoral losers in Europe and posting its biggest one-day loss since the post Brexit sell-off in June last year.
The index has soared around 40 percent over the last year to hit a 15 year high earlier this month. Meanwhile, the pan-European index STOXX 600 closed 1 percent lower, having hit its lowest level in seven weeks earlier in the session. The index was mildly supported by gains in oil prices which lifted energy stocks and by parliamentary election results in France that looked set to give President Emmanuel Macron a huge majority to push through his pro-business reforms.
Italy also offered some comfort to markets after the eurosceptic 5-Star Movement (M5S) suffered a severe setback in local elections. While the big win for Macron was expected, the result in Italy came as a surprise. France's CAC index fell 1.1 percent and Italy's blue chip index fell 1 percent, after briefly inching up into positive territory earlier in the day.
Among individual stock movers, Temenos fell 6.4 percent after the banking software firm terminated a share buyback programme earlier than expected. The stock has gained 50 percent and raced to record highs since the programme was announced in November 2016. An upbeat note from Citi supported shares in French carmaker Renault, which helped lift Europe's car index by 0.4 percent, the only sector to trade in positive territory along with a flat energy index. Oil & gas firms Petrofac, Saipem and Tullow Oil were the biggest individual gainers. Among other gainers on the STOXX was Italian lender UBI Banca, which rose nearly 4 percent on the first day of a 400 million euro cash call to strengthen its capital position.