European stocks had their biggest weekly declines in at least four months amid concern that increasing oil prices and a falling dollar would hurt profit at companies, including BASF AG and Royal Philips Electronics NV.
The Stoxx 600 fell 3.5 percent for the week to 211.67 and the Euro Stoxx 50, a measure for the 12 countries sharing the euro, shed 5.2 percent. That's their steepest losses since March.
The Stoxx 50 sank 3.4 percent, its largest drop since May. The benchmarks, which have tumbled for six days, are still poised for a second successive quarter of gains.
A decision by OPEC to cut its daily output of oil sent the price of crude higher this week, weighing on chemicals makers, including BASF and Bayer AG, which use the commodity as a raw material. Philips, a consumer-electronics maker, Aegon NV and DaimlerChrysler AG paced the slide on the Stoxx 50 as the dollar fell to its lowest against the euro in two months.
"What would be worrisome would be if the little rise in oil prices turns into a big rise, or a little fall in the dollar turns into a big fall," said Roland Lescure, head strategist at CDC Ixis Asset Management in Paris, which oversees US$344 billion in stocks and bonds worldwide.
Stocks on Friday slid as financial services companies including Axa SA and ING Groep NV fell, sending the Stoxx 50 and Stoxx 600 indexes to their longest run of declines since January.
Axa, Europe's second-biggest insurance company, dropped 2.2 percent to 15.02 euros. ING, the region's fifth-biggest financial services company, lost 2.8 percent to 16.2 euros.
Benchmark indexes fell in 14 of the 17 Western European markets. Germany's DAX Index lost 0.04 percent, France's CAC 40 Index declined 0.4 percent and the U.K.'s FTSE 100 Index dropped 1.1 percent. December futures on the Euro Stoxx 50 slid 0.8 percent to 2449.
BASF, the world's largest chemicals maker, and Bayer, Europe's third-biggest, both fell 7.3 percent during the past five sessions on concern chemicals makers' production costs will increase as the price of crude rises. Oil is used as a raw material in products ranging from plastics to paints.
Imperial Chemical Industries Plc, the UK's biggest specialty chemical maker, fell 11 percent. Rhodia SA, a French competitor, shed 13 percent. Clariant AG, the world's second-largest specialty chemicals maker, slumped 14 percent. The Stoxx 600 chemicals group lost 6.4 percent in the week, its worst performance since May.
Declines were also paced by companies with business in the US, the world's largest economy. Every 10 percent drop by the dollar against the euro cuts 3 percent from European earnings, according to Teun Draaisma, an equity strategist at Morgan Stanley.
European economies including Germany, France, the Netherlands and Italy shrank in the second quarter as the dollar's fall eroded the value of sales made in the US, the region's largest trading partner.
Philips, Europe's largest consumer-electronics maker, slid 10 percent. The company, which gets about one-third of sales from the US, said in July that second-quarter sales dropped 18 percent, mainly because of the euro's gains against the dollar.
Aegon, Europe's third-biggest insurer, fell 12 percent.
North America accounts for 60 percent of its revenue.
DaimlerChrysler, a carmaker that relies on the US for more than half its sales, dropped 10 percent.