By Paolo Laudani, Ankika Biswas and Johann M Cherian
(Reuters) -European shares posted their biggest one-day drop in over two weeks on Tuesday, weighed by technology stocks after chip equipment maker ASML (AS:ASML)'s third-quarter results were leaked and showed a disappointing annual sales forecast.
The pan-European STOXX 600 index ended 0.8% lower, with tech stocks falling 6.5% in the sector's biggest one-day drop since October 2020.
The euro zone blue-chip index slid 1.8%, its biggest one-day drop in over two months.
ASML lost 15.6%, the stock's biggest single day drop since June 1998, after the company reported weak quarterly bookings and trimmed its 2025 sales forecasts. The news was leaked ahead of its scheduled release on Wednesday.
"A lot of investors got carried away on the AI (artificial intelligence) excitement and now we're seeing companies like ASML looking ahead and finding an equilibrium," said Danni Hewson head of financial analysis at AJ Bell.
"There's going to be an awful lot of focus on the other earnings updates of the likes of Nvidia (NASDAQ:NVDA) to see whether or not this weakness is replicated in other parts of the sector."
In the U.S. the tech-heavy Nasdaq Composite Index fell nearly 1%.
The STOXX 600 has climbed around 8.8% so far this year, but lags the S&P 500 index, which has scored double-digit gains led by AI optimism.
Germany's benchmark index closed 0.1% lower after hitting a record high in the session.
Energy stocks slumped nearly 3.3% as oil prices slid 5% after a media report said Israel will not strike Iran's oil facility, easing fears of supply disruptions.
Investors' key focus for the week is the European Central Bank's monetary policy decision on Thursday. It is widely expected to trim rates further by 25 basis points following recent data such as September's bigger-than-expected fall in French inflation and the euro zone's worsening economy.
Among gainers, shares of Ericsson (BS:ERICAs) rose 10.8% after the Swedish telecommunications company reported third-quarter core earnings and sales above expectations. The sector jumped nearly 2%.
Bellway (LON:BWY) surged 8.3% as the UK homebuilder said it expects to construct at least 11% more homes in the 2025 financial year.
TotalEnergies (EPA:TTEF) lost 4.8% after the French oil powerhouse said its third-quarter downstream results are expected to sharply decrease due to lower refining margins in Europe and elsewhere.
Deutsche Bank fell 2.6% as its offering of some 16 million shares was priced at 16.01 euros apiece, a bookrunner for the transaction said.