European shares fell on Wednesday as renewed tensions in the Middle East dampened investor sentiment, while technology stocks traded mixed as markets questioned whether the sector’s recent artificial intelligence-driven rally could continue.

The pan-European STOXX 600 index was down 0.6% at 642.22 points in early trade, according to Reuters, as investors were cautious after geopolitical developments pushed oil prices higher.

Energy-sensitive sectors took the brunt of the sell-off. The automobile index fell 1.6%, while banking stocks fell 1.3% as rising crude prices raised concerns about inflationary pressures and their impact on economic growth.

Airline stocks also came under pressure as higher fuel costs weighed on the sector. Shares of Air France and Wizz Air fell more than 2%, reflecting concerns about the impact of rising oil prices on operating costs.

Shares of Lufthansa fell 4% after Citigroup downgraded the airline’s rating from “neutral” to “sell”, adding to weakness across the aviation sector.

According to Reuters, investors’ nerves were jittery after the United States and Iran exchanged strikes, while Washington revoked a license allowing it to sell oil to Tehran. The developments threatened the fragile ceasefire between the two countries and reignited concerns about potential disruptions in global energy supplies.

Technology stocks, which have been among the strongest performers this year on optimism surrounding artificial intelligence, fared mixed. Investors remained cautious following signs of weakness in global technology markets.

Broader technology estimates were also affected by weakness in overseas markets. South Korean equities officially entered a bear market after closing 20% ​​lower off their June record high, while the Nasdaq ended below its 50-day moving average, signaling soft short-term momentum for technology shares.

Within Europe, semiconductor equipment maker ASML rose about 1%, bucking the broader trend. However, chip-related companies Soitec and Aixtron each fell more than 1%, highlighting mixed sentiment across the sector.

Shares in Swedish broadband provider Bahnhof rose 18% after telecom operator Telenor agreed to buy a controlling stake in the company. Reuters reported that the transaction values ​​Bahnhof at about 6.1 billion Swedish crowns, or about $629.7 million.

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