European stocks posted the biggest weekly drop in two months, sending the Dow Jones STOXX 600 Index to the lowest level since March 2003, as concern grew the economy would deteriorate further and companies from Daimler AG to Cie de Saint-Gobain SA reported disappointing earnings.
Swedbank AB and UniCredit SpA led a sell-off in financial shares after Moody’s Investors Service said it may downgrade banks with units in eastern Europe. Axa SA tumbled 30 percent as Standard & Poor’s cut its credit outlook for the insurer. Daimler, the largest truckmaker, and Saint-Gobain, Europe’s biggest supplier of building materials, sank at least 15 percent.
The STOXX 600 dropped 7.5 percent this week to 176.93 as all 19 industry groups retreated except food and beverage companies.
The gauge is down 11 percent this year as companies from Electricite de France SA to Diageo PLC fueled concern the global economic slump will wipe out profits and US Treasury Secretary Timothy Geithner failed to convince investors that his plan to rescue US banks will work.
“It was a very disillusioning week, especially the uncertainty over exposure to eastern Europe,” said Peter Braendle, who manages US$50 billion at Swisscanto Asset Management in Zurich. “We are on very low levels and there are still a lot of uncertainties surrounding the financial industry.”
The UK’s GDP will decrease 3.3 percent this year, instead of the 1.7 percent predicted in November, the Confederation of British Industry said. By the end of this year, the economy will have contracted for six consecutive quarters, the business lobby said.
National benchmark indexes fell in all of the 18 western European markets. Germany’s DAX Index dropped 9 percent, while France’s CAC 40 declined 8.3 percent. The UK’s FTSE 100 lost 7.2 percent as Anglo American PLC and Xstrata PLC slid.