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Apple's European suppliers got whacked on Monday, but it's a different story Tuesday

Key Points
  • European tech stocks traded higher Tuesday after a sell-off in U.S. stocks Monday led by Apple.
  • Apple shares dropped 5 percent on Monday after one of its suppliers reported a request to "materially reduce" shipments from them, sparking concerns over demand for iPhones.
  • European Apple suppliers AMS and IQE pared some of their losses on Tuesday.
Apple iPhone XR and iPhone XS smartphones are displayed during an event at the Steve Jobs Theater in Cupertino, California, on Wednesday, Sept. 12, 2018. 
David Paul Morris | Bloomberg | Getty Images

European tech stocks rebounded on Tuesday as hopes of a U.S.-China trade deal outweighed concerns about soft demand for Apple's iPhones.

Europe's tech sector rose nearly 1 percent after dropping around 4 percent on Monday, as stocks recovered from a U.S. stock sell-off led by Apple.

Apple shares dropped 5 percent on Monday after Lumentum, a laser manufacturer that makes 3-D technology for iPhone's face-recognition function, cut its outlook for next quarter. Shares of Lumentum plummeted nearly 33 percent after the company reported a request from one of its biggest customers to "materially reduce" shipments to them. Lumentum did not name Apple in the report but listed the iPhone maker as its largest customer in filing for fiscal year 2018.

Austrian chipmaker AMS, which provides chips for iPhones, was negative at the open but pared its losses from Monday when shares plunged 20 percent. AMS, which trades on the SIX Swiss Exchange, is down more than 60 percent so far this year.

Shares of British semiconductor group IQE, which supplies parts for iPhone chips, also rebounded nearly 6 percent after tumbling nearly 29 percent on Monday. The company said it expects its full-year earnings to come in below expectations but reiterated its guidance for fiscal year 2019.

Rough time of it for Asian firms too

Apple suppliers were also under pressure in Asia with shares of Japan Display, AAC Technologies and Hon Hai Precision, better known as Foxconn, trading lower.

Meanwhile electronic parts suppliers and software companies provided relief to the broader European tech sector. Shares of Siltronic, a Munich-based silicon parts maker, gained roughly 3 percent, while U.K. software firm Micro Focus International also edged up around 3 percent.

— CNBC's Evelyn Chang and Lauren Feiner contributed to this report.

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