European stocks fell for a second week as disappointing economic data from China and the U.S. fanned concern that the global recovery is faltering. Stocks sensitive to economic growth including basic- resources and construction shares sank. Dana Petroleum Plc jumped 22 percent after the Scottish oil explorer said it received a takeover approach. BP Plc rallied for the first week since its Macondo well started spewing oil into the Gulf of Mexico in April. The Stoxx Europe 600 Index lost 4.5 percent this week, the biggest drop for six weeks, as all 19 industry groups dropped. The gauge has declined 13 percent from this year’s high on April 15 amid concern about the impact of Europe’s sovereign debt crisis on the world economy. “Leading indicators are rolling over and turning less positive,” a team of strategists at Citigroup Inc. in London, led by Adrian Cattley, wrote in a note. “Weaker macro has driven risk assets lower and the second quarter was one of the worst for equities compared with bonds in the last 20 years.” National benchmark indexes fell in all 18 western European markets. Germany’s DAX lost 3.9 percent and France’s CAC 40 slid 4.9 percent, while the U.K.’s FTSE 100 retreated 4.1 percent. Cooling Economy China’s manufacturing growth slowed more than economists forecast in June, adding to signs that the world’s fastest- growing major economy is cooling. The government’s Purchasing Managers’ Index declined for a second month, falling to 52.1 from 53.9 in May. The median forecast in a Bloomberg News survey of 12 economists was 53.2. Goldman Sachs Group Inc. lowered its 2010 forecast for growth in China’s real gross domestic product to 10.1 percent from 11.4 percent. Quarter-on-quarter real GDP growth will “slip to 8 percent or below” in the second half of 2010 before rebounding, the brokerage said in a note. Goldman kept its forecast for 2011 GDP growth unchanged at 10 percent. In the U.S., manufacturing expanded in June at the slowest pace this year as factories received fewer orders and demand from abroad cooled. The Institute for Supply Management’s gauge of manufacturing fell to 56.2 from 59.7 a month earlier. Economists had forecast the measure would fall to 59. U.S. employers eliminated jobs in June, adding to concern the economy is falling back into recession. Payrolls declined by 125,000 last month after an increase of 433,000 in May, the Labor Department reported, reflecting a drop in federal census workers and a smaller-than-forecast rise in private hiring. The unemployment rate dropped to 9.5 percent from 9.7 percent. Ominous Sign “Ostensibly a decline in unemployment rate may look good, but because this is due to a drop in participation rate it’s an ominous sign,” Robbert van Batenburg, head of research at Louis Capital Markets LP in New York, said in e-mail. Boliden AB, a Swedish copper and zinc miner, led losses in the 30-member Bloomberg Europe Metals & Mining Index, dropping 11 percent, as metals such as copper and aluminum declined. China and the U.S. are the world’s largest metals consumers. Mining companies pared some of their losses after Australia’s new Prime Minister Julia Gillard scaled back a proposed tax on the industry. The government exempted most commodities from the levy, raised the threshold and cut the tax to 30 percent on coal and iron ore earnings, compared with a previous plan to collect 40 percent of all resource profits. Mining Stocks Eurasian Natural Resources Corp., a Kazakh metal producer, fell 9.6 percent. Lonmin Plc, the world’s third-largest platinum producer, tumbled 9.5 percent. Lafarge SA sank 13 percent. CM - CIC Securities cut its recommendation on the world’s biggest cement maker, citing a “deterioration in visibility on the speed of the recovery in volumes and therefore earnings in mature countries.” Dana Petroleum climbed 22 percent after Korea National Oil Corp. confirmed that “it is in very preliminary discussions regarding a possible cash offer.” KNOC, as the Korean company is known, plans to spend about $6 billion on acquisitions and projects this year in an effort to more than double output by 2012. Dana, based in Aberdeen, Scotland, holds more than 100 interests in exploration and production licenses in nine countries. Stop Leak BP rallied 5.7. The company’s first relief well aimed at plugging its Gulf of Mexico gusher is seven to eight days ahead of schedule to intercept and eventually stop the leak, U.S. National Incident Commander Thad Allen said yesterday. BP shares have plunged 50 percent since the April 20 explosion on the Deepwater Horizon rig that killed 11 crew members and triggered the leak, the worst in U.S. history. Taylor Wimpey Plc lost 16 percent as Britain’s second- largest house builder by volume said first-half home sales in the U.K. will probably decline to 4,650 from 4,702 a year earlier. Genmab A/S surged 15 percent after a revised agreement with partner GlaxoSmithKline Plc reduced the risk of a new share sale. Genmab and Glaxo said they had amended their agreement on Arzerra, an experimental antibody under test to treat cancer and autoimmune diseases. In exchange for lower milestone payments and royalties, Genmab will spend less to develop the drug and get an upfront payment of 90 million pounds ($136 million). To contact the reporter on this story: Francesca Cinelli in Milan at fcinelli@bloomberg.net.

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