Updates with analyst comment, prices

By Twesha Dikshit

May 15 (Reuters) - The European shares benchmark tumbled on Friday, led by technology and material shares, as a deadlock in U.S.-Iran negotiations dented risk appetite, rattled energy markets and rekindled economic slowdown concerns.

U.S. President Donald Trump, on the last day of his trip to China, said his patience with Iran was running out and that China's President Xi Jinping agreed that Tehran must not be allowed to develop nuclear weapons and should reopen the Strait of Hormuz.

Global bonds sold off, and oil prices gained more than 1%. Inflation data readings in the U.S. and several European countries this week have shown that the impact of the Iran war has started showing up in big increases in consumer and producer prices.

The pan-European STOXX 600 .STOXX was down 1.4% at 607.70 points, as of 0836 GMT, and is down for the week so far.

European blue-chips are on track to deliver their strongest earnings growth since 2022, according to Thursday's LSEG data, but investors have brushed that off.

"The problem is the longer this (closure of the strait) persists, the market can't ignore the actual effects of high energy prices on the global economy... so more pain has to be priced in," said Daniel von Ahlen, senior macro strategist at GlobalData TS Lombard.

"Markets which are more reliant on foreign energy imports and manufacturing heavy, which is energy intensive, feel the pain a bit more."

Money markets currently price in more than two rate hikes from the European Central Bank, with the first one expected in June.

Regional stock markets fell on Friday with the German DAX .GDAXI declining 1.7%, while France's CAC 40 .FCHI and Spain's IBEX 35 .IBEX shed 1.4% each.

In the UK, the benchmark FTSE 100 .FTSE was down 1.3%, with Prime Minister Keir Starmer struggling to hold on to power after his main rival signalled a challenge to his leadership.

Meanwhile, European materials index .SXPP dropped 4.3% tracking metal prices, while tech shares .SX8P tumbled 3% after two consecutive sessions of gains.

Semiconductor firms ASML ASML.AS, ASM International ASMI.AS, BE Semiconductor BESI.AS and Aixtron AIXGn.DE were down between 3.4% and 7.3%.

Bank shares .SX7P dropped 2% with UK's Barclays BARC.L and Lloyds LLOY.L were off 3% and 2.8%, respectively.

Among other movers, LVMH LVMH.PA dipped 1.4% after the conglomerate agreed to sell fashion brand Marc Jacobs.

Stellantis STLAM.MI fell 2% after the carmaker signed a roughly 1-billion-euro ($1.16 billion) deal with China's Dongfeng 600006.SS to produce Peugeot- and Jeep-branded vehicles.

Technoprobe TPRO.MI soared 35% after the Italian semiconductor firm upgraded its 2026 outlook.