* STOXX 600 down 0.1 pct
* Dialog Semi tanks after analysts flags Apple risk
* VSTOXX rises to more than 1-month high
* Tech sector under pressure
* LVMH sales lifts European luxury sector
(Recasts, adds quotes and detail, updates prices)
By Kit Rees
LONDON, April 11 A sharp drop in shares of
Apple-supplier Dialog Semiconductor dominated trading in
otherwise muted European stock markets on Tuesday as a
holiday-shortened week and broadly risk-off sentiment kept
investors from making big bets.
The pan-European STOXX 600 was little changed as
gains in the luxury goods sectors offset weakness in chipmakers
and financials. Better-than-expected quarterly sales at LVMH
lifted shares of the world's largest luxury goods
maker to a record high.
European shares have been treading water in recent sessions,
with the benchmark index little changed so far this month on
mounting political tensions in the Middle East and North Korea,
above-average valuations and caution ahead of earnings season.
Expectations that European stocks might see bigger
swings in the short term rose to their highest since
end-February, following a similar spike in volatility on Wall
On the day, tech stocks were the worst sectoral performers,
with a sub-index tracking top European tech firms down 1
percent. Losses were led by Dialog Semiconductor,
which lost nearly a quarter of its market value after a German
broker said the company risks losing business from Apple.
More than 4.4 million Dialog shares had changed hands by
mid-morning making them the busiest traded stock by far on the
Broker Bankhaus Lampe cut its rating on the chipmaker to
"sell" from "buy", warning that Apple could be
developing its own PMIC. Dialog Semiconductor supplies Power
Management chips to Apple.
"We hear from the industry that about 80 engineers at Apple
are already working on a PMIC with specific plans to employ it
in the iPhone by as early as 2019," analysts at Bankhaus Lampe
said in a note.
Last week, shares in Imagination Technologies lost
two-thirds of their value after Apple, its biggest customer,
said that it would stop using Imagination's graphics technology.
"(Dialog Semiconductor) could potentially go the same way as
Imagination Technologies has recently. It just shows the risks
associated with companies being very reliant on one key
contract," Dafydd Davies, partner at Charles Hanover
Industry peer AMS also came under pressure after UBS
cut its rating to "neutral" from "buy", sending the stock down
7.1 percent, while STMicroelectronics fell 2.6 percent.
Banking stocks dropped 0.5 percent, with Banco
Popular the biggest loser, down 4 percent and hitting
fresh record lows. On Monday, the bank said that it was
considering another capital hike to clean up its balance sheet
and would consider a merger deal.
Elsewhere, high-end consumer stocks were on a firmer
footing, pulled higher by optimism following LVMH sales.
Burberry rose more than 2 percent, while Swiss firm
Richemont was up 1.2 percent.
Gains by bluechip commodity-related BP and Rio Tinto
, up 1 percent and 2 percent respectively, also helped
limit the damage to the broader benchmark from weakness in tech
(Reporting by Kit Rees; Editing by Louise Heavens)