European shares pause after rally, doubts linger over Iran peace deal

European shares slipped on Wednesday, pausing after a strong finish to the second quarter and amid caution over signs that peace talks between Iran and the United States hit a new stalemate.

The pan-European STOXX 600 index .STOXX slipped 0.3% to 639.64 points by 0710 GMT after logging its strongest quarter since October 2020 in the previous session.

The technology sector .SX8P, which had been a key driver over the past three months, was flat, with chip equipment maker ASML ASML.AS down 1.1% and IQE IQE.L and Infineon IFXGn.DE trading marginally lower.

Schneider Electric <SCHN.PA> lost 2.1% after the AI equipment maker said it had signed an agreement to acquire Cognite Holding, a privately held provider of AI software and industrial data for $3.1 billion in an all-cash deal.

Focus will be on the European Central Bank's Sintra conference, where U.S. Federal Reserve chair Kevin Warsh and ECB President Christine Lagarde are expected to speak later in the day.

Traders anticipate both major central banks to lift interest rates by at least 25 basis points each later this year, LSEG-compiled data showed. Oil prices have fallen back to pre-Iran war levels, however, concerns are that price pressures will linger for some time.

Among top movers, Primark owner Associated British Foods <ABF.L> slipped 2.7% after saying it still expects annual profit to be below the prior year's outcome, adding that the Middle East conflict impacted its European profit outlook.

Swedish defence equipment maker Saab <SAABb.ST> gained 1.7% after signing a contract to deliver 16 Gripen E fighter aircraft to Ukraine in a deal worth about 24.6 billion Swedish crowns ($2.54 billion).

Elsewhere, Iran said it would not meet with top U.S. envoys who flew to the region following an outbreak of hostilities, clouding the prospects for a lasting peace between the two countries.

-Reporting by Johann M Cherian in Bengaluru; Editing by Rashmi Aich/Reuters