EUROPE MARKETS: Europe Stocks Drop, Snapping Win Streak

By Tommy Stubbington and Saabira Chaudhuri

LONDON (MarketWatch) -- European stocks took a breather on Monday from the previous week's rally, after closing at five-year highs on Friday.

The Stoxx Europe 600 Index closed down 0.2%, snapping six straight sessions of gains during the Christmas holiday period when investors continued to take the U.S. Federal Reserve's recent decision to scale back its stimulus as a positive sign for the economy.

Germany's DAX closed 0.4% lower after hitting a fresh all-time high Friday, while France's CAC 40 and London's FTSE 100 shed 0.1% and 0.3%, respectively.

Despite sizable gains in 2013, many investors remain confident that European equities can sustain their run next year.

"Unlike their global peers, European company profits and stock markets remain well below peak," said Kevin Lilley, European equity manager at Old Mutual Global Investors. "With attractive multiples, a recovering economy, a return of international investors and an unlimited European Central Bank backstop in place, Europe would appear to have significant potential for 2014,"

In the U.S., shares were trading mixed after pending home sales ticked up by 0.2% in November, falling short of economists' expectations of 1%, according to the National Association of Realtors.

In currency markets, the euro (EURUSD) and sterling (GBPUSD) were both up against the dollar. Gold was down 0.7%, while silver was down 1.7%.

In corporate news, shares of International Personal Finance led gainers among the Stoxx after Numis bumped the home credit business's stock into 'Buy' territory.

Nokian Renkaat Oyj said Monday that Finland's Tax Administration has ordered the company to pay 26.9 million euros in additional taxes, fees and interest for 2007. The Finnish tire maker said it would appeal the decision. If the decision is upheld, the company's corporate tax rate is expected to rise in the next five years, from the previously announced 17% to a maximum 22%.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires