European shares slip as AI stocks weigh; US jobs data in focus

European shares slipped on Thursday, tracking a sombre mood in global markets as AI stocks came under pressure, while investors awaited a key employment report out of the United States to gauge the path for interest rates.

The pan-European STOXX 600 index .STOXX slipped 0.1% to 638.27 points by 0704 GMT.

AI stocks in Asia and on Wall Street overnight witnessed sharp declines as the sector cooled from a strong finish to the previous quarter that pushed up their valuations sharply.

However, Europe's smaller exposure to tech stocks helped limit its drag on the STOXX index.

The STOXX 600 tech index .SX8P slipped 1.5% and led sectoral declines, with Soitec SOIT.PA down 5.1% and Aixtron AIXGn.DE falling 3.6%.

Bucking the trend, Sodexo EXHO.PA rose 6.5% after the French food caterer raised its full-year organic revenue growth forecast, citing stronger-than-expected third-quarter performance.

The focus will shift later in the day to the U.S. June nonfarm payrolls data, which could offer clues on the outlook for U.S. interest rates.

Economic data will be under greater scrutiny by investors to gauge the monetary policy outlook as the Federal Reserve has said it will stop issuing forward guidance.

-Reporting by Johann M Cherian and Tharuniyaa Lakshmi in Bengaluru; Editing by Eileen Soreng/Reuters