European Stocks Hold Steady as Consumer Shares Rise, AI Tech Selloff Weighs on Markets

European shares were little changed on Tuesday as gains in consumer-focused sectors offset a broad selloff in artificial intelligence-linked technology stocks, while investors closely monitored the NATO summit in Turkey for signals on increased European defense spending.

The pan-European STOXX 600 index edged up 0.1% to 650.99 points after retreating from record highs in the previous session. Investors shifted into sectors that have lagged this year, betting that easing oil prices and softer inflation pressures could improve consumer demand and reduce the likelihood of further interest rate hikes.

Luxury stocks climbed 2%, while consumer staples, including food, beverages, personal care, and household goods, gained more than 1.4%. Automakers also advanced 1.3%, reflecting broader interest in value-oriented sectors.

Market participants continued rotating away from expensive technology stocks into cheaper industries. Analysts said the decline in oil prices could ease inflation concerns, potentially giving central banks less reason to tighten monetary policy further.

Technology stocks dropped 2.3% as investors questioned whether the recent AI-driven rally had pushed semiconductor valuations too high. French chip materials supplier Soitec plunged 12%, Austria’s AT&S fell 9.5%, and STMicroelectronics lost 5%. Siemens Energy also declined 7% after Barclays downgraded the stock to "underweight," citing valuation concerns despite its strong long-term outlook.

The weakness mirrored sentiment in Asia, where Samsung Electronics shares fell despite upbeat earnings guidance, while Nasdaq futures slipped nearly 1% ahead of U.S. trading.

Defense stocks eased after recent strong gains, although attention remained on the NATO summit, where member nations were expected to announce new military procurement deals under pressure from the United States to boost defense spending. Saab bucked the trend, rising 4.1% after Morgan Stanley upgraded the stock to "overweight" and NATO announced plans to purchase up to 10 GlobalEye surveillance aircraft from the Swedish company.

Elsewhere, Renault gained 2.2% after reports that China's BYD had explored acquiring a stake in the French automaker. Shell rose 3% after raising its second-quarter integrated gas production outlook, providing additional support to European energy stocks.