Euro stays above $1.18
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European stock markets dropped for a second straight day on Wednesday, with some preholiday selling taking place as the U.S. made a huge leap forward in approving highly anticipated tax reform.
What are markets doing: The Stoxx Europe 600 index dropped 0.7% to close at 388.37, building on a 0.4% loss from Tuesday (http://www.marketwatch.com/story/european-stocks-build-on-rally-ahead-of-german-ifo-report-2017-12-19).
Germany's DAX 30 index erased 1.1% to 13,069.17, while France's CAC 40 index fell 0.6% to 5,352.77.
The U.K.'s FTSE 100 index lost 0.3% to 7,525.22 (http://www.marketwatch.com/story/ftse-100-adrift-after-hitting-6-week-high-with-imf-to-discuss-view-on-uk-economy-2017-12-20).
The euro rose to $1.1877, up from $1.1840 late Tuesday in New York.
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What's driving the market: Analysts said Wednesday's weakness came as traders booked some profit ahead of Christmas after markets rallied earlier this week on signs Republicans in the U.S. were close to passing sweeping tax reforms.
Both the House of Representatives and the Senate passed the tax bill on Tuesday and late Wednesday, respectively (http://www.marketwatch.com/story/republican-tax-bill-clears-house-and-heads-to-senate-for-vote-2017-12-19), but the Senate's parliamentarian found minor provisions that broke budget rules, forcing lawmakers to strip them out and requiring the House to vote again. House leaders have scheduled a new tax vote for later Wednesday.
Hopes for tax cuts have boosted markets globally in recent weeks, partly because the package is seen as benefiting businesses and providing a boost to the economy. Among the plan's many features, the bill cuts the corporate tax rate to 21% from 35%.
Meanwhile in Britain, the International Monetary Fund downgraded its forecast for 2017 U.K. growth (http://www.marketwatch.com/story/imf-downgrades-uk-growth-forecast-2017-12-20) to 1.6% from 1.7% and said it expects growth to slow to 1.5% in 2018. The IMF said last year's decision to leave the European Union was slowing down growth, warning that a "breakdown in discussions could lead to a disorderly exit from the EU and sharp falls in asset prices."
What are strategists saying: "Having teased, tantalized and promised the markets for most of this year that we would see some significant measures to reform the tax code it seems that U.S. President is on the cusp of delivering some measures that, depending on who you listen to, are either transformative or unfair," said Michael Hewson, chief market analyst at CMC Markets UK, in a note.
"The big question now is whether having seen stocks rise in anticipation of legislation being passed, that the current momentum is maintained or we see a case of 'buy the rumor, sell the news' as we head towards the Christmas break," he added.
Stock movers: Shares of Steinhoff International Holdings NV plunged 35%, adding to a 20% tumble from Tuesday when the retailer said lenders were increasingly pulling their credit lines. Steinhoff shares are now down 44% so far this week and 94% this year after an accounting scandal was omvdisclosed earlier this month.
Read:It's 90% off for shares in Mattress Firm's parent--why that's still not a good deal (http://www.marketwatch.com/story/its-90-off-for-shares-in-mattress-firms-parent-why-thats-still-not-a-good-deal-2017-12-20)
OMV AG (OMV.VI) rose 1.5% after the Austrian oil-and-gas company signed a five-year sale-and-purchase agreement with Qatargas (http://www.marketwatch.com/story/omv-signs-5-year-lng-agreement-with-qatargas-2017-12-20).
NMC Health PLC (NMC.LN) slid 4% after a trading update.
(END) Dow Jones Newswires
December 20, 2017 12:24 ET (17:24 GMT)