* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
* Europe’s tech stocks drop 3 pct in worst day since Oct
* French and southern euro zone bonds rally
* Nasdaq falls another 1 pct as Apple drops as much as 4 pct
By Marc Jones
LONDON, June 12 (Reuters) - A global sell-off in technology stocks gathered momentum on Monday, with Apple and other Silicon Valley heavyweights sliding for a second session after the falls spread to Europe and Asia.
The euro and its bonds rallied after pro-European parties scored in French and Italian elections over the weekend and as the stocks jitters raised a fresh set of questions for the Federal Reserve ahead of its policy meeting this week.
The tech-heavy Nasdaq fell almost 1.5 percent as Apple took another near-4-percent drubbing. Google parent Alphabet, Facebook and Microsoft dropped 2-2.5 percent in hectic early trading.
“This is the nature of the tech sector. Valuations do from time to time become very stretched and they come back and anyone who has paid a very high valuation might experience some short-term pain,” said Fergus Shaw, fund manager at Cerno Capital.
The Apple-led worries had taken a heavy toll on Asian rivals including Samsung overnight and then hit Europe’s big chipmakers STMicro and Dialog.
The Nasdaq has still gained nearly 13 percent year-to-date, outperforming the wider market. But an ebbing of the reflation trade that was based on U.S. President Donald Trump’s tax and spending promises, and a run of negative U.S. economic surprises, have prompted some investors to review the mix of their portfolios.
Europe’s tech index fell 3.5 percent to put it on track for its biggest one-day loss since Britain’s Brexit vote a year ago. The index had reached a 15-year high earlier this month having soared around 40 percent over the last year.
“It is pretty healthy to have some form of correction in the tech sector to distribute the flows into other sectors,” said ABN AMRO Chief Investment Officer Didier Duret.
The pan-European STOXX 600 was down 0.9 percent, supported modestly by oil prices, which bolstered shares in energy stocks. First round French parliamentary election results which look set to give President Emmanuel Macron a huge majority to push through pro-business reforms also helped.
Italy also offered some support after the eurosceptic 5-Star Movement failed to make the run-off vote in almost all the main cities up for grabs in local elections.
Italian government bond yields fell to their lowest since January and Portugal’s to nine-month lows , while French bonds closed the gap on Germany.
“Macron doing well in the first round of the French parliamentary elections bodes well for him getting a majority,” said Lyn Graham-Taylor, fixed income strategist at Rabobank.
“The fact that 5-Star did poorly in local elections in Italy also suggests a setback for populism in Europe.”
The euro rose back to $1.1220 in the currency markets, where anticipation is building ahead of Wednesday’s conclusion of a two-day U.S. Federal Reserve meeting at which the central bank is expected to nudge up U.S. interest rates.
But economists will be watching to see whether the recent dip in economic data and uncertainty surrounding Trump’s presidency has dented confidence.
Britain’s pound was in focus again, slipping back to $1.2655 and 88.45 pence per euro as Prime Minister Theresa May attempted to prop up her position after last week’s damaging election result.
A survey from one of the UK’s biggest business groups showed confidence had been hit hard by the uncertainty created by the election ahead of the start of Brexit negotiations with the European Union next week.
May’s plans for leaving the EU had not changed, her spokesman said on Monday, although there were calls from Scotland to steer a course away from a “hard” Brexit.
“It is hard to overstate what a dramatic impact the current political uncertainty is having on business leaders,” said Stephen Martin, director general of the Institute of Directors.
“The consequences could -- if not addressed immediately -- be disastrous for the UK economy.”
The G10 economic surprise index, covering the world’s 10 leading economies, has dipped below zero for the first time in eight months. JPMorgan said the “reduced upside risk to growth and inflation” had led it to underweight growth-sensitive stocks and assets in favour of high-income plays.
Lower growth expectations are also feeding into dollar weakness. The greenback dropped back under 110 yen and the dollar index against a basket of currencies nudged down to 97.118 as Treasuries hovered at 2.218 percent before easing back up to 97.30.
In commodities, crude oil prices extended gains after rising on Friday when a pipeline leak in major producer Nigeria counterbalanced supply worries weighing on the market.
U.S. crude and Brent were both more than 1 percent higher, at $46.59 and $48.90 a barrel respectively. Copper was steady, while gold steadied after a three-day losing streak at $1,265 an ounce.
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets (Additional reporting by Dhara Ranasinghe, Patrick Graham and Helen Reid in London; Editing by Catherine Evans)