May 25 (Reuters) - European stocks slipped on Thursday as concerns over the U.S. debt ceiling standoff and a global economic slowdown resurfaced and outweighed initial optimism from upbeat corporate earnings, while luxury stocks stabilized after a bruising selloff.
The pan-European STOXX 600 index (.STOXX) closed 0.3% lower, shedding about 2.7% in three consecutive days, knocked down by recent losses in luxury stocks (.STXLUXP) and lack of progress in talks to raise the U.S. debt ceiling and avert a default.
A media report said that U.S. House Speaker Kevin McCarthy does not know if congressional and White House negotiators will be able to reach a deal on raising the debt limit on Thursday, renewing fears of an unprecedented default in the United States.
"The U.S. debt ceiling is headline at the moment - the uncertainty that it is bringing to the markets is incredibly difficult to navigate," said Helen Jewell, deputy chief investment officer at BlackRock Fundamental Equities for EMEA.
European stocks came under strong selling pressure this week as investors fretted over a potential U.S. debt default and sticky inflation in the UK, after a strong earnings season had boosted several regional bourses to record highs.
Weighing the most were declines in energy stocks (.SXEP) on a slide in crude oil prices, while luxury majors took a breather and helped stave off steeper losses on the STOXX 600.
"Luxury stocks can weather a recession, because high net worth individuals tend to purchase these ... so if the stocks see a deeper dip, I would see that as a potential value buy," said Giles Coghlan, chief market analyst at HYCM.
Further, technology (.SX8P) was the top performing sector on a boost from European chipmakers after the world's most valuable chipmaker Nvidia Corp (NVDA.O) forecast quarterly revenue more than 50% above estimates, and said it is boosting supply to meet surging demand for its artificial-intelligence chips.
Shares of BE Semiconductor (BESI.AS) jumped 7.6%, while ASM International (ASMI.AS) rose 8.6% and ASML Holdings (ASML.AS) added 5%. Bank of America analysts see both ASM and ASML as beneficiaries of growing AI adoption.
Germany's DAX (.DAX) slipped 0.3% after data showed Europe's biggest economy contracted in the first quarter of 2023, compared with the previous three months, thereby signalling a recession.
Cineworld (CINE.L) slumped 8.2% even as the British cinema chain operator said it expects to emerge from Chapter 11 bankruptcy protection in July.
On the flip side, GN Store Nord (GN.CO) was among the top gainers on the STOXX 600, with an 11% advance after a successful private placement of shares.
Reporting by Sruthi Shankar and Ankika Biswas in Bengaluru; Editing by Sherry Jacob-Phillips, Shailesh Kuber and Maju Samuel
Our Standards: The Thomson Reuters Trust Principles.