STOXX 600 ends higher after banks, healthcare offset declines in tech

By Nikhil Sharma and Purvi Agarwal

(Reuters) - European shares closed slightly higher on Tuesday, after gains in banks and healthcare companies offset declines in technology stocks.

The continent-wide STOXX 600 index was 0.2% higher.

HSBC and Banco Santander were the biggest boosts to the banks index which led gains on the STOXX and was trading around levels last seen in October 2008.

Healthcare shares gained 1%, with heavyweight Novo Nordisk gaining 2.8%, and Britain's Smith+Nephew advancing 6.1% after annual sales and profit at the medical products maker beat analysts' expectations.

"There is a definite defensive tone to the trading. Global indices, particularly those in Europe which are not quite as geared toward technology are doing okay," said Steve Sosnick, chief market analyst at Interactive Brokers.

Telecommunication companies gained 1.2%.

A global-sell off in technology stocks pulled the tech index down 1.5%. Heavyweight chip company ASML dipped 2.2%.

Artificial intelligence-exposed stocks including Schneider Electric and Siemens Energy shed 3.6% and 7.3%, respectively.

A report said U.S. President Donald Trump's administration was planning to toughen semiconductor restrictions on China.

Miners were the biggest losers on the index with a 1.8% fall.

Meanwhile, British Prime Minister Keir Starmer said he would increase annual defence spending to 2.5% of GDP by 2027 and target a 3% level last seen just after the Cold War.

Britain's BAE Systems ended 4.7% higher, while most European defence companies pared early gains.

"European equities are taking this as a trigger that there's going to be a bit of a fiscal change in terms of the direction of spending... the question is how long that interpretation of more fiscal action stands," said Iain Barnes, chief investment officer of Netwealth.

In Germany, the economy shrank by 0.2% in the final quarter of 2024 compared with the previous quarter, confirming a preliminary reading.

The German blue-chip stock index was 0.1% lower after ending the previous session higher following the victory of Friedrich Merz-led conservatives in the national election.

Unilever fell 1.3% after the consumer goods giant said CEO Hein Schumacher would step down and be replaced by finance chief Fernando Fernandez.

Heidelberg Materials gained 3.6%, after the world's second largest cement-maker said it expects its operating profit to rise further this year after a record 2024.

SIG Group dropped about 14%, the biggest loser on STOXX 600, after the Swiss packaging company reported annual results.

($1 = 0.9549 euros)

(Reporting by Nikhil Sharma and Purvi Agarwal; Editing by Janane Venkatraman, Subhranshu Sahu, Peter Graff)