Updates with closing prices

By Johann M Cherian, Utkarsh Hathi and Ragini Mathur

June 5 (Reuters) - European shares slipped on Friday and ended the week lower, as uncertainty about Middle East peace efforts kept investors on edge and technology stocks paused after a blistering two-month rally.

The pan-European STOXX 600 index .STOXX was down 0.3% at 622.66 points and lost 0.5% for the week.

Brent crude LCOc1 fell for a second straight session, though prices remained near $93 a barrel. Hopes for a diplomatic breakthrough between the U.S. and Iran appeared limited after the two countries exchanged strikes earlier in the week, while a U.S.-brokered Israel-Lebanon ceasefire also looked fragile after Hezbollah rejected the pact.

The resulting spike in energy costs has complicated the inflation outlook. Data this week showed euro zone inflation accelerated in May, prompting markets to price in a 25-basis-point interest rate hike from the European Central Bank next week.

"A hike is consistent with the data," said a group of analysts at Deutsche Bank led by Mark Wall, in a note.

"A U.S.-Iran deal would not prevent it. After three months of elevated energy prices, the ECB sees some indirect inflation as inevitable."

U.S. JOBS DATA EYED

Sentiment was also dented by stronger-than-expected U.S. jobs data, which showed employers added far more positions than forecast in May. The figures reinforced expectations that the U.S. Federal Reserve could raise interest rates later this year, adding pressure to global equities.

Technology stocks .SX8P were among the top sectoral decliners with a 2.9% drop, following a rally that has helped the shares gain about 30% in the past two months — the most among STOXX 600 sectors.

The pullback echoed a broader pause in global technology shares this week after disappointing results from U.S. chipmaker Broadcom AVGO.O.

European chip stocks such as Infineon IFXGn.DE and Aixtron AIXGn.DE lost 9.1% and 4.8%, respectively, while AI equipment makers Legrand LEGD.PA and Schneider Electric SCHN.PA slipped 2.3% and 4.5%, respectively.

Earlier this week, the European Commission proposed laws to boost domestic cloud, AI and semiconductor industries and cut reliance on U.S. Big Tech, called the Cloud and AI Development Act and Chips Act 2.0.

"Tech is coming to Europe and will almost certainly be a story for the latter years or so of the current decade and the early years of the 2030s," said Jeremy Batstone-Carr, European strategist at Raymond James.

The financial services sector .SXFP was heading for a 0.8% weekly loss after rising redemption requests from asset managers reignited concerns about strains in private markets.

Among other stocks, thermal processing services company Bodycote BOY.L slid 13% after saying Apollo Global Management APO.N does not intend to make the firm a buyout offer.

Single-board computing company Raspberry Pi RPI.L jumped 27.6%, hitting a record high, after raising its full-year profit forecast.