May 14 (Reuters) - European shares closed higher on Thursday, hitting their highest level in a week, boosted by the performance of technology stocks, while investors remained cautious about developments in talks between the United States and China.

The pan-European STOXX 600 index closed 0.8 percent higher at 616.05 points thanks to broad-based gains.

The technology sector index jumped 2.6 percent, led by semiconductor stocks.

Germany's DAX index rose 1.3 percent, leading regional stock markets higher, with SAP shares climbing 3.6 percent. Bank of America said the cloud software giant's continued momentum and nearly 25 percent growth in its backlog of orders could boost revenues into double digits.

However, the continent's exposure to AI component companies is dwindling compared to its counterparts in the US and Asia, prompting a number of investors to look beyond European markets.

“This is the theme that has been working against Europe for the past four years since Chat GBT first appeared in late 2022,” said Sameer Samana, head of global equities and assets at the Wells Fargo Investment Institute. “ This is the most persistent reason for poor performance, and more recently, it has become about energy imports and political instability.”

Global attention was focused on the bilateral meeting between the United States and China in Beijing. Investors expressed hope that US President Donald Trump could encourage China to persuade Iran to reach an agreement with Washington to end the price war that had driven crude oil prices to $100 a barrel.

Frederique Carrière, head of investment strategy at RBC Wealth Management, said, "We are waiting for developments in China... and all eyes are on the Middle East crisis until it is actually resolved."

Among other companies, shares of luxury brand Burberry fell 6.8 percent after it announced fourth-quarter sales that met expectations, while shares of Watches of Switzerland jumped 19.2 percent after forecasting higher-than-expected annual operating profit.

On the policy front, the European Central Bank's chief economist, Philip Lane, said that raising interest rates might be necessary to combat inflation. Financial markets are currently pricing in more than two interest rate hikes by the ECB this year.