MILAN: European shares retreated on Thursday with technology stocks leading losses in tandem with their US peers, while a swathe of middling local economic data fuelled bets on continued easy monetary policy.

The pan-European STOXX 600 index shed 1.4% after gaining as much as 1.3% earlier in the day, as the technology sector plummeted 3.8% from a 19-year closing high. The losses came in line with a 3.8% drop in Wall Street's tech-heavy Nasdaq index, triggered by high valuations and US jobless claims suggesting a stalling in the country's labour market.

Technology has marked the speediest recovery among its peers from pandemic lows but has also been seen as long overdue for some capitulation of gains. Weak local retail sales and service sector data earlier in the day augured an uneven economic recovery. But markets clung to the prospect of continued liquidity measures, after a particularly dismal inflation reading earlier in the week.

The European Central Bank is expected to follow the US Federal Reserve in keeping monetary policy easy. The day's losses kept the STOXX 600 comfortably within a trading range seen since early June. After bouncing from March lows, a recovery in local equities and the economy appeared to be stalling.

French drugmaker Sanofi and its British peer GSK fell despite starting a clinical trial for a protein-based Covid-19 vaccine candidate. British Engineering business owner Melrose Industries topped the STOXX 600 after it flagged signs of a pick-up in some of its markets as the coronavirus crisis slashed its first-half profit by 90%. Online food services provider Hellofresh bottomed out the STOXX 600, plunging more than 10% in its worst day in more than two years.