UKX FTSE 100 Index

By Carla Mozee, MarketWatch

Vivendi chairman under investigation in Italy, reports say

Stocks in Europe dropped by the most in three weeks, finishing Friday's session by stepping back from 14-month highs as investors questioned the prospects for U.S. tax policy changes under U.S. President Donald Trump.

The Stoxx Europe 600 closed down by 0.8% at 370.01, the biggest decline since Jan. 30, FactSet data showed. The index lost as much as 1.4% intraday and only the telecom sector closed higher.

Among major national indexes, Germany's DAX 30 slid 1.2% to end at 11,804.03.

The moves pushed the Stoxx 600 into the red for the week. It notched a decline of 0.1% after earlier this week hitting its strongest levels since December 2015.

"European equities are on the back foot into the weekend, continued profit-taking dragging indices from recent highs. This stems from more tempered optimism towards Trump tax changes," with "pudding wanted for proof," by investors, said Mike van Dulken, head of research at Accendo Markets, in a note.

Skepticism over quick passage of a tax-code overhaul backed by Trump has been growing. U.S. Treasury Secretary Steven Mnuchin said Thursday the administration wants a tax overhaul enacted by August, but analysts have said that goal looks ambitious given the complexities of working out reform with lawmakers.

Read: Doubts persist about Trump's tax timing (http://www.marketwatch.com/story/doubts-persist-about-tax-timing-as-trump-meets-with-ceos-2017-02-23)

Europe's losses accelerated as the euro hit an intraday high of $1.0619 against the U.S. dollar. The euro later traded at $1.0583, compared with $1.0590 late Thursday in New York.

"A weaker USD...hinders Europe via reciprocal GBP and EUR strength," despite election risk for the euro stemming from France's upcoming presidential election, said van Dulken.

This week, far-right French presidential candidate Marine Le Pen began widening her lead over her two main competitors (http://www.marketwatch.com/story/investors-bidding-adieu-to-french-stocks-as-le-pen-gains-in-polls-2017-02-21). Many investors consider Le Pen a risk to the euro as she's called for France to leave the shared currency and to exit from out of the European Union.

Van Dulken also noted the euro came under pressure after "less hawkish" minutes from the Federal Reserve's (http://www.marketwatch.com/story/fed-minutes-show-support-for-rate-hike-fairly-soon-2017-02-22) most recent meeting, released this week.

Next week, the markets face potential risks from a speech by Federal Reserve Chairwoman Janet Yellen and Trump's appearance at a joint session before Congress.

(http://projects.marketwatch.com/2017/trump-today-signup/)

Movers: Vivendi SA shares dropped 3.9% following reports (http://variety.com/2017/tv/global/top-vivendi-execs-under-investigation-in-connection-with-mediaset-stock-purchases-1201995687/) that Italian prosecutors have opened an investigation of Chairman Vincent Bollore over alleged market manipulation in the media company's accumulation of a stake in Italian broadcaster Mediaset (MS.MI). Mediaset shares ended 1.3% lower.

BASF shares (BAS.XE) fell 2.9% after the German chemicals heavyweight said it's "cautiously optimistic for 2017". The company posted a rise in fourth-quarter net profit of 689 million euros (http://www.marketwatch.com/story/basf-profit-doubles-lifted-by-chemicals-business-2017-02-24) ($728.84 million), above expectations of EUR624 million.

Royal Bank of Scotland PLC (RBS.LN) (RBS.LN) sank 4.5% after the 70% U.K.-owned lender said its annual net loss more than tripled to 6.96 billion pounds (http://www.marketwatch.com/story/rbs-loss-slumps-to-87-billion-on-conduct-charges-2017-02-24) ($8.73 billion), after it put aside billions of pounds to cover conduct issues.

Saipem SpA (SPM.MI) dropped 6.8% after Italian oil-services contractor's fourth-quarter adjusted profit of EUR26 million fell short of a Thomson Reuters consensus estimate of EUR57 million.

But shares of British Airways parent International Consolidated Airlines PLC (IAG.LN) (IAG.LN) perked up 4.5% after the group posted a 29% rise in net profit and announced a EUR500 million share buyback (http://www.marketwatch.com/story/iag-profit-rises-29-to-launch-share-buyback-2017-02-24) ($529.7 million), in a sign of improving profitability.

Indexes: France's CAC 40 lost 0.9% at 4,845.24. The U.K.'s FTSE 100 declined 0.4% to 7,243.70 (http://www.marketwatch.com/story/ftse-100-loses-ground-as-rbs-leads-banks-lower-2017-02-24) and Italy's FTSE MIB fell 1.2% to 18,596.66 at the close.

(END) Dow Jones Newswires

February 24, 2017 12:25 ET (17:25 GMT)

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