By Tharuniyaa Lakshmi and Purvi Agarwal
July 23 (Reuters) - European shares fell on Thursday as chip stocks slid and Nestle tumbled nearly 7%, heading for its biggest one-day decline since July 2002 after its results, while investors awaited the European Central Bank's policy decision.
The pan-European STOXX 600 index fell 0.5% to 643.56 points by 0917 GMT.
Tech stocks slipped 0.8%, led lower by STMicroelectronics , which dropped 13% after the chipmaker forecast third-quarter revenue with a midpoint
slightly below market expectations. BE Semiconductor dropped 2% after its second-quarter results.
Offsetting some losses was a near-24% surge in Soitec after its first-quarter revenue beat expectations.
Sentiment towards tech stocks has stayed mixed, as investors have punished U.S. hyperscalers such as Alphabet for their rising AI spending, while beneficiaries of that spending are struggling with lofty valuations.
"You're seeing more questions being asked about where's the future revenue going to come from... twelve months ago the rage was about hyperscalers and the same questions were asked. Now, the semis came into the fall," said Rushabh Amin, multi-asset portfolio manager at Allspring Global Investments.
"Even if you have decent earnings, there is a kind of drag coming from a slight unwind in sentiment and in positioning."
The STOXX 600 food and beverages index led sector losses, with Nestle tumbling nearly 7% after its results, putting it on track for its biggest one-day drop since July 2002 despite raising its full-year organic sales outlook.
The company also said it expects to raise about $3.43 billion from selling part of its water and premium beverages business.
Energy stocks rose 1.6% as Brent crude climbed above $96 a barrel after the United States launched fresh strikes on Iran and Yemen's Houthis hit oil tankers in the Red Sea, widening a conflict that has rattled global markets. [O/R]
The ECB is widely expected to keep interest rates unchanged later in the day, with investors focused on any clues about its next move. Markets are pricing in one 25-basis-point rate hike and see nearly a 90% chance of another.
Among other stocks, TotalEnergies gained 2.7% after reporting its strongest quarterly earnings in nearly three years, boosted by higher oil prices and robust refining margins.
Takeover target easyJet climbed 5% despite the budget airline reporting a 70% drop in third-quarter profit.
Finnish forestry group Stora Enso reported a quarterly operating profit below market expectations on Thursday, sending its shares down about 11%.
(Reporting by Tharuniyaa Lakshmi and Purvi Agarwal in Bengaluru; Editing by Harikrishnan Nair, Amanda Cooper and Nivedita Bhattacharjee)
