* 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 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
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
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)