European shares muted on AI valuation concerns; Middle East tensions linger

European shares were muted on Friday as broader gains were largely offset by declines in technology stocks while investors assessed renewed Middle East tensions that put the benchmark on track for declines this week.

The pan-European STOXX 600 rose 0.2% to 642.42 by 0714 GMT and remained on track for a weekly loss that could snap a four-week winning streak.

Most sectors on the STOXX 600 were higher with miners leading gains with a 2% rise.

Travel and leisure stocks gained 1%, with airlines largely higher. UK's EasyJet jumped 13.4% after agreed in principle to a £5.7 billion ($7.65 billion) takeover approach from Apollo Global.

Chip stocks declined, with Siltronic and Soitec dropping 2% and 2.8% respectively. ASML slipped 2%.

Investors were cautious ahead of South Korea's SK Hynix's U.S. debut, as concerns lingered over elevated valuations across AI-related stocks that could limit the room for gains for the chipmaker.

On the geopolitical front, Iranian forces attacked U.S. military infrastructure in Gulf states on Thursday, further weakening a three-week-old ceasefire, and plunging markets, into uncertainty over the conclusion of the conflict.

(Reporting by Tharuniyaa Lakshmi in Bengaluru; Editing by Nivedita Bhattacharjee)