European shares slip as global tech retreat weighs

European shares slipped on Tuesday, weighed down by a global selloff in tech stocks, while investors monitored the NATO summit for clues on which sectors could emerge as beneficiaries of increased spending.

The pan-European STOXX 600 index closed about 0.7% down at 646.29. The index had hit a record high on Monday, before settling lower.

After recovering from the shock triggered by the Middle East conflict, European equities have traded in a narrow range this week as investors await fresh cues from the earnings season and developments from the NATO summit.

NATO leaders unveiled arms deals worth tens of billions of dollars on Tuesday, driving home the message that ?they are heeding U.S. calls to spend more to defend Europe.

"This has been a rude, if necessary, wake-up call for European countries. While admittedly uneven, Europe has heeded the lesson and is now investing accordingly," strategists at Atlantic Council, a Washington, D.C.-based think tank, wrote in a note.

Still, defence stocks slipped 2.5%, while tech shares dropped 3.6% on concerns that a quarter-long rally in chip stocks had overvalued the sector. Chip equipment maker ASML fell 7.3%.

South Korea's Samsung Electronics set the tone for the global tech selloff, with shares sliding despite strong forecasts, while the Nasdaq index on Wall Street slipped nearly 0.7%.?

"It's part of a rotation to cheaper, less-loved, less tech-heavy sectors of the market. We're seeing much more of a broadening out rather than leadership from a narrow group of stocks," said Kathleen Brooks, research director at brokerage XTB.