European stock markets declined, erasing earlier gains in the final trading session to follow the downward trend of U.S. markets, with noticeable sector rotation.
The Europe Stoxx 600 index closed down 0.5%, having risen as much as 0.9% earlier in the day. Sectors that performed strongly this year, such as energy, mining, telecommunications, and technology, saw profit-taking. In contrast, chemical, food, and retail stocks outperformed.
In the telecom sector, LM Ericsson Telephone and Nokia Oyj plunged 6.3% and 7% respectively, following reports that Nvidia may enter into competition in the telecom chip space.
In other individual stock movements, insurer Unipol Assicurazioni SpA rose 4.7% on market expectations that it would acquire the brand and some assets of Banca Monte dei Paschi di Siena if Intesa Sanpaolo's takeover bid for the Italian bank succeeds. Banco BPM had proposed a merger of equals with Monte dei Paschi the day before Intesa Sanpaolo made its offer, though no specific price was disclosed.
On Tuesday, Banca Monte dei Paschi di Siena Group gained 2.6%, Intesa Sanpaolo rose 0.9%, and Banco BPM advanced 1.5%.
The healthcare sector also drew significant attention. GlaxoSmithKline fell 0.5% after agreeing to acquire Nuvalent Inc. for $10.6 billion. AstraZeneca declined 1.2% after its experimental weight-loss drug achieved an 11.8% reduction in body weight in a mid-stage trial.
The Middle East conflict remains a key focus, with Brent crude oil prices falling to around $90 per barrel after U.S. President Donald Trump reiterated steps toward ending the U.S.-Iran war. Any progress in negotiations would be favorable for Europe, particularly with the European Central Bank meeting scheduled for Thursday, where policymakers are expected to raise interest rates.
"Beyond merger talks in the Italian banking sector, an improvement in global risk sentiment is also beneficial for European equities," said Wolf Von Rotberg, equity strategist at Bank J Safra Sarasin. "The financial sector had been underperforming for the preceding months."