European shares slip as mixed luxury earnings weigh on markets

European shares edged lower on Wednesday, as diverging results from French luxury groups weighed on the broader sector, while investors stayed on the sidelines ahead of the Federal Reserve's monetary policy decision and earnings from U.S. Big Tech.

The pan-European STOXX 600 index .STOXX closed down 0.3% at 645.01 points, snapping a three-session winning streak. The luxury sector gauge .STXLUXP fell 2.4%, leading sectoral losses.

Shares in Kering PRTP.PA jumped nearly 17% to the top of the STOXX 600 index, and clocked their biggest one-day gain since 2002, after second-quarter sales at its flagship brand, Gucci, fell less than expected.

"We believe the strong marketing effort planned for late August could help boost fourth-quarter sales and return Gucci to positive growth," HSBC Global Research analysts said in a note.

In contrast, Hermes shares HRMS.PA tumbled 11%, logging their steepest one-day slide since 2010, after the Birkin bag maker posted second-quarter sales growth in line with expectations but said it had yet to see a fundamental rebound in China, its biggest market.

Technology stocks .SX8P dipped 0.4%, for a third straight day, led by a 4.8% drop in semiconductor equipment maker ASM International ASMI.AS despite an upbeat forecast.

Microsoft MSFT.O and Meta META.O will report after U.S. markets close, with investors laser-focussed on evidence of returns on their AI investments and whether the profits justify these companies' lofty valuations.

Energy stocks .SXEP rose 2.2%, following a near 8% jump in Brent crude LCOc1 to over $90 a barrel, as major airstrikes resumed in the Middle East and dashed hopes for an imminent end to the U.S.-Israeli war with Iran. O/R

"The reporting season is driving markets, but has been overshadowed by developments in the Middle East. Then there is general market weakness as investors remain quite nervous about capex in data centres, particularly related to AI," said Andrea Cicione, head of research at TS Lombard.

Meanwhile, the U.S. Federal Reserve is expected to hold rates steady on Wednesday, but Chair Kevin Warsh's policy statement will be parsed for clues about the central bank's next likely move.

Among other movers, French IT group Sopra Steria shares SOPR.PA soared 13.6% after the company raised its full-year revenue growth target.

Glencore GLEN.L stock rose 2.8% after its first-half copper production rose 15% on higher grades at key operations.

Deutsche Bank DBKGn.DE gained 1% after reporting a 10% jump in second-quarter profit, defying expectations for a drop.

Aberdeen shares ABDN.L fell 4.3% after the British asset manager posted £3 billion ($4 billion) in net outflows in the first half of the year, compared with expectations of £800 million in inflows.

-Reporting by Purvi Agarwal, Tharuniyaa Lakshmi and Avinash P in Bengaluru; Editing by Amanda Cooper, Harikrishnan Nair and Emelia Sithole-Matarise/Reuters