4 Min Read
* STOXX 600 down 0.2 pct
* French banks boosted by election poll
* WPP, Berendsen down sharply
* Focus on Fed officials (adds French stocks)
By Atul Prakash and Helen Reid
LONDON, March 3 (Reuters) - European shares dropped on Friday following disappointing company updates, although French stocks performed better after a poll eased anxieties over the impact on markets of the presidential election.
The pan-European STOXX 600 was down 0.14 percent by 1225 GMT after briefly climbing to a 15-month high in the previous session. However, the benchmark index is up more than 1 percent so far this week and headed for a positive weekly close.
France's blue-chip CAC 40 index was up 0.8 percent, outperforming the broader European market, Germany's DAX and Britain's FTSE.
Stocks in French banks BNP Paribas, Societe Generale and Credit Agricole were top gainers on the index, and were last trading up around 3.5 to 4.2 percent, extending their gains after a poll suggesting a victory by far-right leader Marine Le Pen in the French presidential election was less likely.
An opinion poll by Odoxa showed independent centrist candidate Emmanel Macron coming first in the first round of the election, putting the far-right leader into second place for the first time since the candidate line-up became clear.
Odoxa put Macron on 27 percent in the first round on April 23 with Le Pen behind him on 25.5 percent, and scandal-hit conservative candidate Francois Fillon on 19 percent.
The rally in banking stocks came as the gap between French and German 10-year government bond yields fell to its lowest in a month.
WPP shares were down 8 percent after the world's largest advertising group said it had a relatively slow start to 2017 and would plan conservatively for the year ahead after hitting its 2016 target for net sales growth.
"WPP is a hugely successful business, but it is feeling the effect of slower growth in the UK and USA, where clients are spending less. When you are the size of WPP, you can’t but notice the broader state of the economy," said Hargreaves Lansdown fund manager Steve Clayton.
The British company dragged down the European media index , which fell 2 percent to feature as the biggest sectoral faller in Europe.
Workwear and hygiene company Berendsen slumped 14.9 percent, the biggest faller in the STOXX 600 index, after its financial results and outlook statement. The company said the first half would continue to be impacted by legacy operations in the United Kingdom.
However, losses were capped by other individual companies.
Gemalto shares rose 6 percent, top gainers in the STOXX 600 index, after the digital security company said its profits from operations rose 7 percent in 2016.
Investors have become cautious as recent comments from some Fed policymakers have raised expectations that the U.S. Federal Reserve will hike interest rates this month. Fed Chair Janet Yellen and Vice Chair Stanley Fischer are both due to speak later on Friday and are expected to echo the same view.
"The main focus today will be on Fed chief Yellen's speech later this evening. Even as many traders and analysts basically think that a rate hike in March is more or less a done deal, any comments to clarify this matter even more would be considered as positive for markets," said Markus Huber, a trader at City of London Markets.
Investors were wary of taking on more risk on the last trading day of the week and ignored some encouraging regional macroeconomic indicators.
A survey by IHS Markit found that activity in euro zone businesses grew at its quickest pace in nearly six years in February and job creation reached its fastest in almost a decade, driven by robust demand and exports.
Editing by Susan Thomas/Keith Weir