UPDATE 1-Brexit tensions weigh on Europe, tech stocks slide

* UK ramps up no-deal preparations as EU trade talks stall

* German exports rise in July but remain below pre-crisis levels

* Technology leads sectoral declines, defensives rise

* French electricity giant EDF sinks as output falls (Updates prices; adds background, comments)

By Shreyashi Sanyal

Sept 8 (Reuters) – European shares fell on Tuesday on fears that the UK was in danger of leaving the European Union without a trade agreement, while technology firms tumbled as their U.S. peers looked set to deepen a selloff from last week.

The pan-European STOXX 600 fell 0.4%, shortly after opening marginally higher, as technology stocks weighed the most with a 1.7% fall.

The focus now shifts to Wall Street returning from a long weekend, following news that Softbank made big option purchases during the run-up in the U.S. stock market, with the trades being revealed just as a tech-led rally faltered.

“(Wall Street) did stabilise and recover soon after the Friday open but this will be the first full trading session where specific news of the recent fevered options market activity has been fully revealed to the market. So it’s a big session today,” said Jim Reid, strategist at Deutsche Bank.

Futures tracking the Nasdaq 100 index fell 1.3% in early trading.

Adding to the downbeat tone, Britain began a fresh round of Brexit trade talks this week by warning the European Union that it was ramping up preparations to leave the bloc without an agreement as the two sides bicker over rules that govern nearly $1 trillion in trade.

Analysts at Commerzbank urged caution against completely excluding a scenario where negotiations fail.

“This is the result of the typical prisoner’s dilemma: for fear of getting short shrift, an agreement is then reached that is disadvantageous for both sides but the ‘devil may care’ approach demonstrated by the British government does not exactly help to instil confidence.”

Frankfurt shares fell the least among peers after data showed German exports rose in July but remained far below their pre-crisis level.

Defensive sector indexes, including real estate as well as food and beverages, were among the few making gains in early trading.

French electricity giant EDF sank 6.5% after announcing its nuclear output fell 17.6% in August due to the effects of the pandemic and reactor outages.

Britain’s Royal Mail jumped 15% after raising its revenue target for the current year.

The European Central Bank’s (ECB) policy decision is on the roster for Thursday, with the bank expected to keep its policy stance unchanged. Investors will focus on the ECB’s inflation forecasts and whether it seems concerned by the euro’s recent strength.

Markets also await second-quarter GDP data for the euro zone later in the day, with economists polled by Reuters expecting a 12.1% quarter-over-quarter decline. (Reporting by Shreyashi Sanyal in Bengaluru; editing by Patrick Graham and Devika Syamnath)

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