European shares rose on Tuesday as a strong forecast from chipmaker STMicroelectronics lifted technology stocks, while investors awaited a key inflation report later in the day for insights into how the Mideast conflict has affected the euro zone economy.
The pan-European STOXX 600 index (.STOXX) rose 0.9% to 627.06 points by 0806 GMT. Technology stocks (.SX8P) led sectoral gains with a 2.6% rise.
Chipmaker STMicroelectronics rose 7.9% to hit €63.9, its highest since September 2000, after lifting revenue targets for its data centre business, signalling strong demand from the AI boom.
Other AI-related stocks such as Infineon (.IFXGn.DE) and Schneider Electric (.SCHN.PA) added 5.1% and 2%, respectively.
"Semiconductors are probably no longer merely a traditional technology sector. They are gradually becoming the central infrastructure of tomorrow's global economy," said John Plassard, partner, head of investment strategy at Cité Gestion.
"The real question may therefore no longer be whether the cycle will eventually end, but rather how long this global AI supercycle can continue before markets genuinely begin to anticipate its conclusion."
Lebanon announced a partial ceasefire between Hezbollah and Israel on Monday following a brief escalation of hostilities, which also aided risk sentiment.
Crude prices eased more than 1% as investors pinned hopes on U.S. President Donald Trump's remarks that talks with Iran were ongoing, despite a report saying that Tehran had indirect negotiations with Washington.
Still, at $93 a barrel, energy prices will likely remain painful, analysts said.
A report on euro zone consumer inflation, due later in the day, is expected to show consumer prices rose 3.2% in May on an annual basis from the month before.
Traders expect the European Central Bank to hike interest rates by 25 basis points when it meets next week, according to data compiled by LSEG.
Among others, Prosus(PRX.AS) shares rose 10% after EU antitrust regulators said on Monday the Dutch tech investor has been given more time to comply with its pledge to sell down its stake in Delivery Hero (DHER.DE).
Abivax (ABVX.PA) slumped 32% after the French drugmaker published the late-stage trial results for its inflammatory bowel drug.
British American Tobacco (BATS.L) slipped 3.6% after the Dunhill cigarette maker flagged volume weakness in the heated tobacco and cigarette industry.
Meanwhile, a European Parliament committee voted to remove EU import duties on many U.S. goods, a step towards complying with the trade deal agreed with the United States last year.
