European shares were flat on Tuesday as defence stocks climbed, offsetting declines in technology stocks that came on the back of worries over an intensifying U.S.-China technology war.
The pan-European STOXX 600 index SXXP was up 0.07% as of 0816 GMT.
The technology index (.SX8P) was a major drag and fell 0.9%.
The U.S. is planning to toughen semiconductor restrictions on China, continuing and expanding the Biden administration’s efforts to limit Beijing’s technological prowess, Bloomberg News reported on Monday.
Semiconductor stocks STMicroelectronics 
STMPA fell 1.4% and ASML 
ASML lost 1.6%.
Meanwhile, AI-exposed stocks such as Schneider Electric 
SU and Siemens Energy 
ENR shed 1.3% and 2.2%, respectively.
Unilever 
ULVR fell 3% after the consumer goods giant said CEO Hein Schumacher will step down and be replaced by finance chief Fernando Fernandez.
Countering losses, the european aerospace and defence index (.SXPARO) jumped over 1% following reports that Germany’s chancellor-in-waiting Friedrich Merz has opened talks to quickly approve up to 200 billion euros ($209.44 billion) in defence spending.
Shares of German arms makers Rheinmetall 
RHM, Hensoldt 
HAG and Renk 
R3NK jumped 2.6%, 2.5%, and 6.1% respectively.
Thyssenkrupp 
TKA rose 6% after its CEO said the group would hold a shareholder meeting ahead of warship division spin-off.
($1 = 0.9549 euros)