* Technology shares lead declines in Europe

* Bayer soars after quarterly operating profit above

estimates

* Intertek ( IKTSF ) gains on revised $12.7 billion takeover offer

from EQT

* Germany's April inflation rose 2.9%

(Updates to after markets close)

By Twesha Dikshit and Avinash P

May 12 (Reuters) - Europe's STOXX 600 closed 1% lower in

broad-based declines on Tuesday as dimming hopes for a U.S.-Iran

peace deal sent oil prices higher and weighed on risk sentiment.

The pan-European STOXX 600 dropped 1% to 606.63

points, with all major regional bourses in the red, led by

Frankfurt's DAX which fell 1.6%.

The disruption to energy supplies through the Strait of

Hormuz has acted as an overhang on European equities, keeping

them below pre-war levels, as worries linger over the economic

impact of elevated crude prices.

Technology shares slid 3.1% and led declines on

Tuesday, tracking steep losses among AI stocks and chipmakers on

Wall Street. Tech stocks globally had a strong run over the past

few weeks and in Europe they are among the top gainers.

INFLATION DATA

"The rising price of oil also shows the energy dependence of

Europe, and that dependence is harming European companies more

than elsewhere. This is a brilliant reminder that there's also

military dependency, security dependency in Europe, which places

Europe into basically the shackles of dependency," Florian

Ielpo, head of macro at Lombard Odier Investment Managers, said.

Reflecting increasing price pressures, a final estimate

showed Germany's inflation accelerated slightly to 2.9% in

April, while elsewhere U.S. consumer prices rose at a steady

pace for a second straight month in April.

U.S. President Donald Trump said the ceasefire with Iran was

"on life support", with Tehran rejecting a U.S. proposal to end

the conflict and proposing a list of demands that Trump

dismissed as "garbage".

Defence stocks remained under pressure, lost 1.8%

and marked their fourth straight day of losses.

POLITICAL UNCERTAINTY IN BRITAIN

Meanwhile in Britain, Prime Minister Keir Starmer was facing

calls to step down following one of the worst defeats for Labour

in last week's local elections.

British heavyweight banks such as Barclays ( BCS ) and

Lloyds fell 3% and 4%, respectively.

A 6% fall in Munich Re weighed on the insurance

sector after the German reinsurer posted disappointing

property and casualty revenue in the first quarter.

On the policy front, European Central Bank policymaker

Joachim Nagel said the bank must raise interest rates if the oil

shock due to the Iran war threatened to unmoor inflation

expectations in the euro zone.

Money markets currently expect three hikes from the ECB

before the end of the year.

Among others, Intertek ( IKTSF ) advanced 6.4% after Swedish

private equity group EQT made a final sweetened 9.4 billion

pound ($12.7 billion) takeover proposal for the British product

testing company.

Shares of Bayer jumped 3.6% after the German firm

reported a better-than-expected quarterly operating profit.