Europe Stocks Drop Most in Eight Months as Trump Concern Deepens

(Bloomberg) -- European stocks tumbled as the impact of a worsening U.S. political crisis spread throughout the world after a report that President Donald Trump had asked the FBI director to drop an investigation into a former top aide.

The Stoxx Europe 600 Index slid 1.2 percent at the close in the biggest drop since September. The benchmark had rallied as much as 21 percent since a Nov. 4 low amid bets for stronger global growth and increased U.S. fiscal spending following Trump’s election, reaching a 21-month high earlier this month.

• Stocks slid to a two-week low after contents of a memo written by James Comey when he was FBI director surfaced Tuesday, alleging the U.S. president asked him to drop an investigation into former National Security Adviser Michael Flynn. 
• The revelation comes as a blow to an administration already reeling from criticism of his firing of Comey and a report Monday that Trump revealed sensitive and highly classified intelligence to two Russian diplomats. The memo has Democrats raising the possibility that the president engaged in obstruction of justice, an impeachable offense.
• Banks, among the winners of the rally following Trump’s election, were the second-biggest losers in Stoxx 600 groups Wednesday, retreating 2 percent. 
• “Risk appetite was dealt a blow,” Accendo Markets analysts Mike van Dulken & Henry Croft wrote in a note. “This adds to a darkening cloud of controversy and disarray hovering over the White House. It also means more questions about the administration’s ability to garner enough Republican, let alone bipartisan support, for the policy pledges for which investors are growing increasingly impatient.”

--With assistance from Elena Popina

To contact the reporter on this story: Blaise Robinson in Paris at brobinson58@bloomberg.net.

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Namitha Jagadeesh, Richard Richtmyer