* STOXX 600 down 0.1 pct, blue chips down 0.5 pct
* European equities up 7.7 percent in 2017
* Italian equities hit 16-week low as election date set
* UK's FTSE, Spain's IBEX lag in 2017 (Adds details, closing prices)
By Kit Rees and Danilo Masoni
LONDON/MILAN, Dec 29 (Reuters) - European stocks inched lower on Friday, the final trading day of 2017, scoring their strongest year of gains since 2013 thanks to a surge among tech stocks and a robust resources sector.
The pan-European STOXX 600 index fell 0.1 percent in thin volumes on the day, while euro zone blue chips dipped 0.5 percent.
Britain's FTSE 100 ended at a new record high, up 0.9 percent in a half-day of trading for the index, while Italian equities declined 1.2 percent at a 16-week low after the president dissolved parliament on Thursday and an election day was scheduled for March 4.
"Recent developments in Italian politics have further increased the probability that the election outcome will be a very fragmented parliament and made the formation of a governing coalition after the election more difficult," said UniCredit economist Loredana Federico.
Overall 2017 has been a positive year for European stocks, fuelled by strong company earnings, a supportive economic backdrop and an absence of major political upsets.
The STOXX ended 2017 with a gain of 7.7 percent, its strongest year since 2013. Germany and Italy's benchmarks were the standout performers, rising 12.5 percent and 13.6 percent respectively this year.
Periphery markets have also had a strong year, with Greece's benchmark up 24.7 percent and Portugal's PSI up 15.2 percent.
Britain's FTSE 100 has lagged slightly, rising 7.6 percent in 2017, as has Spain's IBEX, which is up 7.4 percent as the crisis in Catalonia curbed enthusiasm for Spanish equities in the latter part of the year.
Brexit uncertainty has dented sentiment towards UK equities, while a recovering pound has also put pressure on the blue chips' large proportion of overseas earners.
"Brexit is going to be very much the same story as last year ... that’s just going to weigh constantly on the markets,” Jasper Reimers, senior analyst at Vertex Capital, said.
Looking ahead to 2018, investors remain upbeat about the region's stock market although there are concerns that a further rise in the euro could erode earnings and political risks could slow the economy.
Among sectors, this year has been dominated by a near-20 percent rise among Europe's tech stocks, closely followed by basic resources. Chipmaker AMS has been the top-gaining firm on the STOXX, surging 208 percent in 2017.
Telecoms, retail and media have brought up the rear, with year-to-date losses ranging between 2.4 to 3.7 percent.
Furniture retailer Steinhoff is the worst-performing individual stock this year, down 93.5 percent in 2017 after its CEO resigned amid an accounting probe.
Reporting by Kit Rees and Danilo Masoni; Editing by Toby Chopra