European shares were little changed on Wednesday as caution over escalating tensions in the Middle East overshadowed strong earnings reports from Cartier-owner Richemont and chip equipment maker ASML.
The pan-European STOXX 600 index (.STOXX) was flat at 641.83 points by 0824 GMT, with most sectors in the red.
Investors are scrutinising quarterly results and forecasts at a time when oil prices have risen to $85 a barrel on intensifying Iran-U.S. tensions, with Tehran shutting the crucial Strait of Hormuz.
Technology stocks (.SX8P) rose 1%, led by ASML's (ASML.AS) 3.8% gain after raising its financial forecasts for 2026, reassuring investors about the strength of AI-driven demand.
Chip-related stocks ASM (ASMI.AS) and Soitec (SOIT.PA) also added more than 1% each.
The results came after recent jitters over whether lofty expectations surrounding the AI boom could be sustained, following a strong rally in the second quarter.
Luxury stocks (.STXLUXP), the worst performing index this year, added 2.9%.
Richemont (CFR.S) surged 6.1% after reporting better-than-expected results for its first quarter, helped by booming demand for its jewellery in Asia and the Americas.
"While there is some good earnings news and some positive news for some stocks in Europe, the bigger picture is that we may be a little bit more defensive, just because of geopolitical risk once again," said Michael Metcalfe, head of macro strategy at State Street.
The conflict brewed uncertainty about the European Central Bank's next monetary policy move.
Investors this year have also been reducing their exposure to sectors that could potentially be losers from the AI boom, among which are software companies.
Germany's benchmark (.GDAXI) lagged regional peers, down nearly 0.7%, weighed by software company SAP's (SAPG.DE) 1.2% drop. Other software firms such as Dassault Systemes (DAST.PA) and Sage (SGE.L) lost about 1% each as well.
Among others, Deutsche bank (DBKGn.DE) slipped 0.6% after Frankfurt prosecutors said they had executed a search warrant at one of the lender's branches.
Software developer Nagarro (NA9n.DE) lost 2.7% after Germany's financial watchdog BaFin launched an enforcement review of the firm's 2022 consolidated financial statements.
Axfood (AXFO.ST) fell 11.2% after reporting quarterly results below estimates.
(This story has been refiled to fix to 'ASML,' in the headline)
