Apple suppliers in the region rose after the iPhone maker was reported to have asked suppliers to make at least 75 million 5G phones for later this year, propping up the technology index <.SX8P>.
STMicroelectronics, Dialog Semiconductor, Infineon Technologies and ASML were up between 1% and 4%.
The pan-European STOXX 600 index ended 0.4% lower after swinging in a range of 0.8% to negative 1%. The benchmark index has fallen behind its Wall Street peers this year, sticking to a tight trading range since June amid signs of a stalling euro zone economic recovery.
The European volatility index <.V2TX> rose as much as 1 point to 27.8950 during the session.
Inflation in the bloc turned negative last month for the first time since May 2016, putting further pressure on the European Central Bank to inject yet more stimulus to generate price growth, which has undershot its target for over seven years.
"The ECB has signalled that they would not like to lower interest rates any further. So any changes in policy would likely be to step up purchases of government bonds even further," said Teeuwe Mevissen, Senior Market Economist at Rabobank in Amsterdam.
A recovery in local manufacturing activity continued through August, a survey showed.
Travel and leisure stocks were the worst performing European sector for the day, as spiking COVID-19 cases in popular tourist destination Portugal spurred concerns about the country being quarantined.
British blue-chip stocks fell in catch-up trade after a holiday on Monday, touching a more than three-month closing low.
Financial stocks, particularly EU banks <.SX7P>, marked a second straight day of losses. Rabobank's Mevissen said recent selling in financials was driven by expectations of an increased amount of bankruptcies in the second half of the year, due to the impact of the novel coronavirus.
China-sensitive sectors such as basic resources rose after robust manufacturing data from the country pushed up base metal prices. [MET/L]
Telecom Italia fell 2.1% after its board approved a sale of a minority stake in its last-mile grid to U.S. investment firm KKR, while endorsing a government plan to create a single ultra-fast network with rival Open Fiber.
(Reporting by Ambar Warrick in Bengaluru; Editing by Shailesh Kuber and Saumyadeb Chakrabarty; Editing by Ken Ferris/Mark Heinrich)
By Ambar Warrick
