by Amrita Khandekar

(Reuters) – European shares were flat on Friday as technology stocks fell after software maker SAP forecast a recession, and losses in the healthcare sector were offset by gains in energy companies that saw oil prices rise.

The pan-European index held steady at 463.72 points as of 0831 GMT, after closing at a one-month high on Thursday.

The index was set for a modest weekly gain of 0.6%, mainly driven by a rally in British shares following evidence of easing domestic inflation. But China’s weak economic recovery amid earnings season and concerns about weakness in the technology sector limited gains.

SAP fell 4.8% after the business software maker lowered its full-year outlook for major cloud sales, leaving the index down 0.5%.

Europe’s technology sector, already the biggest decliner among major sectors this week, fell 1.0%.

“The technology hardware sector has been on our list of least favorites for most of this year, (but) we prefer software, so it’s a bit balanced,” said Sutanya Chedda, European equity strategist at UBS.

Chedda said artificial intelligence could be a positive for software but weak sentiment and earnings could hurt the hardware sector.

Healthcare stocks also took a big hit, with Lonza plunging 9.0% after the Swiss contract drugmaker cut its full-year outlook.

The mining sector declined 1.7%, also hit by a series of disappointing results.

Swedish steelmaker SSAB fell 14.8% to the bottom of the STOXX 600 after operating profit halved in the second quarter, while Hydro fell 2.9% after the Norwegian aluminum maker raised capital expenditure guidance.

Keeping losses in check, energy companies rose 0.5% as oil prices rose, as investors assessed the prospect of further stimulus from China. [O/R]

Investors are now focusing on another round of key central bank policy meetings next week for more clues on the global interest rate trajectory.

Deutsche Bank (ETR: ) said it expects the European Central Bank to raise the deposit rate by 25 basis points to 3.75% on July 27, but added that given the ECB’s commitment to getting inflation under control, a further hike in September could not be ruled out.

Thales slipped 4.6% despite defense electronics firm raising guidance, with Jefferies pointing to revised foreign exchange assumptions as an impact on the outlook.

STOXX 600 companies’ second-quarter earnings are expected to fall 9.2% from the prior year, based on Refinitiv IBES data.