STOCKS NEWS EUROPE-U.S. bribery enquiry drives Rolls Royce lower

Shares in Rolls Royce (LSE: RR.L - news) shed 1.9 percent, among the top fallers on Britain's FTSE 100, with traders citing an investigation into the firm in the United States over bribery claims as the main driver behind the move.

The aerospace and defence company has been under scrutiny for some time by the Britain's Serious Fraud Office, but in Wednesday's annual financial report it said it was also being investigated by the U.S. Department of Justice.

Investigations over overseas corruption and bribery are a perennial risk facing makers of military equipment, given the huge contracts and high secrecy in the defence sector.

"The acceleration in gravity of the situation given now the U.S. Department of Justice has joined the investigations to alleged bribery acts is the catalyst for investors and traders to exit long positioning," Jordan Hiscott, senior sales trader at Gekko Global Markets, said.

Citi also issued a bearish note on Rolls Royce on Thursday, highlighting concerns about its accounting policies which it recently changed following advice from Britain's accounting regulator.

"While the financial impact is relatively small, we believe that ongoing concerns about accounting quality may weigh on the share price," Citi said.

Shares in Rolls Royce, which in February said that U.S. and European spending cuts would halt profit growth in 2014, are trading near one-year lows, having dropped more than 20 percent this year, against a 0.6 percent rise on the FTSE 100.

Reuters messaging rm://tricia.wright1.thomsonreuters.com@reuters.net