By Tharuniyaa Lakshmi, Purvi Agarwal and Avinash P
July 27 (Reuters) - European shares ended little changed on Monday as losses in technology stocks, led by ASML, stifled a rally fuelled by easing U.S.-Iran tensions and a sharp drop in oil prices.
The pan-European STOXX 600 index closed flat at 644.52 points after earlier touching its highest level since July 7.
The technology index fell 1.7%, reversing earlier gains, as ASML dropped 8.4%.
The Information reported that China has begun manufacturing domestically
developed immersion deep ultraviolet lithography machines, a key chipmaking tool long dominated by ASML.
The weakness spread across the sector, with ASM International falling 7.1% and BE Semiconductor dropping 9.7%.
Brent crude fell 7.2% to below $90 a barrel after Washington paused its airstrikes on Iran, and Tehran said it would halt attacks on U.S. bases in the Middle East in return.
Travel and leisure stocks were among the biggest gainers, up nearly 2%, as lower oil prices improved the outlook for airlines. Lufthansa, IAG and Ryanair each gained more than 1%.
Energy stocks fell 2%, making them the worst-performing sector on the STOXX 600. [O/R]
"The resilience of European stock markets is being driven by this reversal in oil prices, and it may last a while if we keep seeing crude prices come down," Chris Beauchamp, chief market analyst at IG, said in a note.
The recent flare-up in hostilities had reignited concerns about inflation, particularly in energy-importing regions such as Europe and Asia.
Investors are now focused on the U.S. Federal Reserve's policy decision on Wednesday for clues about the path of interest rates.
Markets expect the Fed to leave rates unchanged, while pricing in a 25-basis-point cut by the end of 2026, according to LSEG data.
Investors will also scrutinise results from major U.S. technology companies including Microsoft, Meta Platforms, Amazon and Apple for signs of whether the AI-driven market rally can continue.
Among other stocks, AstraZeneca gained 1.7% after the drugmaker topped second-quarter profit expectations and reaffirmed its 2026 forecasts.
Vodafone advanced 4.9% after the telecom firm raised its outlook to reflect its recent purchase of a controlling stake in Kenya's Safaricom, and said it expects to deliver results at the upper end of its revised range.
Zabka fell 9.6% after Japan's Seven & I Holdings decided not to proceed with a potential investment in the Polish convenience store operator.
(Reporting by Tharuniyaa Lakshmi and Purvi Agarwal and Avinash P in Bengaluru. Editing by Amanda Cooper, Vijay Kishore and Mark Potter)
