The pan-European STOXX 600 index was up 0.07% as of 0816 GMT.

The technology index was a major drag and fell 0.9%.

The U.S. is planning to toughen semiconductor restrictions on China, continuing and expanding the Biden administration’s efforts to limit Beijing’s technological prowess, Bloomberg News reported on Monday.

Semiconductor stocks STMicroelectronics fell 1.4% and ASML lost 1.6%.

Meanwhile, AI-exposed stocks such as Schneider Electric and Siemens Energy shed 1.3% and 2.2%, respectively. Unilever fell 3% after the consumer goods giant said CEO Hein Schumacher will step down and be replaced by finance chief Fernando Fernandez. Countering losses, the european aerospace and defence index jumped over 1% following reports that Germany’s chancellor-in-waiting Friedrich Merz has opened talks to quickly approve up to 200 billion euros ($209.44 billion) in defence spending.

Shares of German arms makers Rheinmetall, Hensoldt and Renk jumped 2.6%, 2.5%, and 6.1% respectively.

Thyssenkrupp rose 6% after its CEO said the group would hold a shareholder meeting ahead of warship division spin-off.

($1 = 0.9549 euros)