By Avinash P and Johann M Cherian
Feb 6 (Reuters) - Europe's benchmark shares index posted a marginal gain on Friday as carmaker Stellantis’ dour preliminary results and concerns about the outlook for software companies were overpowered by a jump in defence company Kongsberg.
The pan-European STOXX 600 was up 0.1% at 612.61 points as of 1038 GMT, bouncing from a 0.5% drop earlier in the session, and set to end the week little changed.
Stellantis stock triggered a trading halt after it tanked 23%, setting
the stage for its biggest drop ever and sending the broader auto sector index down 3.4%.
The Franco-Italian company booked charges of around 22.2 billion euros ($26.5 billion) in the second half of last year as it scaled down electric-vehicle development plans.
Apart from earnings, global investors were also weighing the repercussions of newer artificial intelligence tools that are likely to stiffen competition with traditional software businesses.
On the other hand, AI majors such as U.S.-based Amazon.com and Alphabet have unveiled plans to boost their spending on the technology that analysts see could benefit hardware makers.
"In the U.S., they are seeing a dislocation between software and hardware, driven by an AI theme that is boosting demand for memory, while creating challenges for software companies, and that’s the dislocation currently being priced by the market," said Sophie Huynh, portfolio manager & strategist at BNP Paribas Asset Management.
Huynh added that much of that uncertainty was spilling over to the rest of the world.
Back in Europe, tech and media stocks were last down 0.8% each and have been the biggest laggards on the STOXX 600 so far this week. The tech sector is set for its biggest weekly drop since late March 2025.
Meanwhile, defence stocks were among top gainers with a 1.4% rise.
Norway's Kongsberg jumped 15% after reporting a bigger-than-expected rise in operating profit for the fourth quarter. It also won a $165 million order from Germany and Sweden for remote weapon stations.
Banks, which had rallied for much of last year, were up 1%. Societe Generale climbed 7.9% after the French lender lifted a key profitability target for 2026 and beat fourth-quarter profit forecast.
Among individual stocks, Weight-loss drugmaker Novo Nordisk gained 5% after the U.S. Food and Drug Administration threatened action on "illegal copycat drugs". Norwegian telecom operator Telenor climbed 4.9% after reporting fourth-quarter earnings above analysts' expectations.
On the data front, German production fell more than expected in December, tempering industrial recovery hopes.
(Reporting by Avinash P and Johann M Cherian in Bengaluru; Editing by Harikrishnan Nair)
