European shares slip on AI slowdown calls and inflation concerns

By Sudeshna Ghoshal and Ragini Mathur

Sept ‌14 (Reuters) - European shares fell ​on Monday ​as technology stocks came under pressure after leaders of top AI companies pushed for a slower pace of development, while another surge in oil prices and global bond yields dampened ‌broader risk appetite.

The pan-European STOXX 600 was down 0.5% at 635.99 points. Most regional markets ⁠declined, though London's and Zurich's indexes rose 0.4% and 0.8%, respectively.

Technology stocks were among the biggest losers, down 2.1%, as AI-linked shares ‌slid globally. Anthropic CEO Dario Amodei ‌called on Saturday for companies to slow advances in AI model capabilities over misuse concerns, a view supported by xAI's Elon Musk and OpenAI CEO Sam Altman.

France-based chipmaker Soitec was the STOXX 600's top decliner, ​falling 12.5%.

Software stocks, however, gained. Octave Intelligence, Capgemini, Sage and Relx rose between 5% and 7.5%.

"These stocks were victims of the SAASpocalypse, on fears AI would wipe out their businesses," said Chris Beauchamp, chief market ⁠analyst at IG.

"Those fears were overdone, but if the AI giants do put their foot on the brake, then the outlook for revenues for ​Sage, RELX and their SAAS brethren globally becomes much brighter, even if it only delays a longer-term loss of business."

European miners fell 2.5%, with miners of both base ​and precious metals declining as they tracked weakness in commodity prices.

Healthcare ‌stocks bucked the broader trend to rise 2.7%. GSK gained 4.7% after reporting positive trial results for two lung cancer drugs, adding to the sector's momentum.

Energy stocks were ⁠off 0.8%, though crude prices jumped 2% after fresh strikes on Saudi energy infrastructure and attacks on ships in the Middle East heightened supply concerns. [O/R]

The recent oil spike has brought inflation worries up front, reinforcing expectations that central banks worldwide could ⁠increase interest rates this year. European economies are particularly vulnerable to surging oil prices as they rely heavily on imports.

ECB policymakers ​warned on Monday that euro zone inflation could exceed already high forecasts, while traders now price in at least one more 25-basis-point ECB increase by year-end after last week's rate hike.

The developments sent government bond yields surging, with the 10-year bund, considered ‌the region's benchmark, at its highest since mid-2009. Meanwhile, U.S. benchmark 10-year Treasury yields rose to the key psychological level of 5%.

This week, the U.S. Federal Reserve ‌is widely expected to hike its main lending rate by at least 25 basis points — in contrast to a split ⁠chance between a hike and a pause seen ‌just a week ago.

Elsewhere, Sweden's centre-left ​opposition looked most likely to take power on Monday after a tight election that reduced the far-right's influence.

(Reporting by Sudeshna Ghoshal in Bengaluru; Editing by Sherry Jacob-Phillips, Joyjeet Das and ‌Vijay Kishore)

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