European technology shares faltered on Monday in response to anxiety over Chinese startup DeepSeek’s budget-friendly AI model, casting doubts on returns within the AI business and the need for expensive hardware.

The pan-European STOXX 600 index dropped up to 0.8% amid a global sell-off, after DeepSeek introduced a complimentary assistant said to operate with lower-cost chips. European tech stocks slid 3.4%, facing their biggest drop since October; ASML dropped 7%, hitting a two-month low, while ASM International tumbled over 12%.

As US tech giants prepare to announce earnings, uncertainties over potential US-EU tariffs loom. The week also features major central bank decisions, with ECB hinting at a rate cut and the Fed expected to maintain rates. Meanwhile, sectors like food, beverages, and utilities remain resilient.

(With inputs from agencies.)