By Twesha Dikshit May 20 (Reuters) – European shares rose on Wednesday, aided by technology shares, but gains were capped as investors remained cautious amid war-driven inflation fears that continued ?to pressure bonds, while markets kept a close watch on U.S.-Iran developments. The pan-European STOXX ?600 was up 0.2% at 612.84 points, as of 0851 GMT. Germany’s DAX and France’s CAC 40 rose 0.2% and 0.3%, ?respectively. President Donald Trump said on Tuesday the war would be over “very quickly”, while Vice President JD Vance talked up progress in talks with Tehran about an agreement to end hostilities. European equities have lagged global peers as the region’s dependence on oil imports has weighed on markets, while AI-driven optimism has pushed ?Wall Street stocks to record highs. “I ?haven’t changed my outlook (on European equities). The first quarter was quite an easy one in terms of expectation because the bar was set very low,” said ?Roland Kaloyan, head of European equity strategy at Société Générale. “Second quarter is going to be more challenging and you will start to feel the effect of the war. I’m not bearish, but I think that market ?could ?consolidate a bit between now and the end of ?the year.” Chip giant Nvidia’s results after market ?close on Wednesday could test the AI-driven momentum. European semiconductor shares gained, with ASM International, ASML and STMicroelectronics up 3% and 4%. The tech index rose 1.2%. Defence shares moved higher, with Czech firm CSG jumping 11% after its first-quarter results. UK’s Babcock rose 2.3% after Peel Hunt upgraded the stock to “buy” from “add”. Media shares led declines on the day, down 1.8%. Luxury shares dipped 0.7%. Exchange operator Euronext advanced ?5% after reporting first-quarter earnings above market expectations. Retailer Marks & Spencer ?jumped 5.1% after forecasting profit growth for the next ?year after annual profit slid due to ?a cyber hack disruption. Norwegian industrial investment company Orkla slumped almost 7% after posting ?a profit decline warning on increasing expenses ?amid the Middle East conflict. Meanwhile, ?the European Union stuck a provisional agreement to remove import duties on U.S. goods, as part of a trade deal with Washington last July, and before Trump’s deadline of July ?4 when he threatened to hike ?tariffs if the deal was not implemented. Separately, data showed British consumer price inflation slowed ?to 2.8% in April from 3.3% in March. The FTSE 100 was flat. (Reporting by Twesha ?Dikshit; Editing by Eileen Soreng and Sonia Cheema)
