Alcatel-Lucent, a telecommunications equipment maker, plunged as it failed to make a pro"t in the fourth quarter. SAP, the world's largest businessmanagement software maker, dropped after saying its pro"t margin will fall.

Deutsche Lufthansa, Europe's second-biggest airline, led a decline by companies sensitive to changes in the price of oil, which rebounded from a one-and-a-halfyear year low.

Statoil paced an advance by energy companies, while Rio Tinto Group led mining stocks higher on an increase in prices of copper and gold.

"Stock prices have risen faster than earnings expectations, " said Marc Schuerer, an investment strategist at Credit Suisse Group's Clariden Leu private banking division, which oversees $97bn.

"The possibility of a correction has increased."

The Dow Jones Stoxx 600 Index lost 0.5% to 372.38 last week. The Stoxx 50 fell0.6 %, as did the Euro Stoxx 50, a measure for the 12 countries using the euro.

European stocks had advanced 3.3% in the four previous weeks, reaching a six-year high on speculation that earnings prospects and takeovers will drive equities higher.

Earnings for companies in the Stoxx 600 will likely slow to 9.2% in 2007, according to estimates compiled by FactSet Research Systems in London. That compares with a forecast of14% for 2006, once companies have "nished reporting fourth-quarter earnings.

Tate & Lyle, maker of the sweetener Splenda, tumbled 18%, the steepest loss in the Stoxx 600, after the company said "scal fullyear pro"t will miss estimates.

Splenda sales haven't risen as fast as projected because some customers delayed orders of the sucralose-based product, the company said.

Nokia was among companies that topped analysts' estimates, gaining 7.4% last week. The world's largest maker of mobile phones said fourth-quarter pro"t jumped 19% as a push into emerging markets drove handset sales to a record.

National benchmarks fell in half of the 18 western European markets.

Germany's DAX lost 0.8%, France's CAC 40 declined 0.6% and the UK's FTSE retreated 0.2%.

Air France-KLM Group, Europe's largest airline, plunged 7.1%. Travel and leisure stocks were the worst-performing of the 18 industries represented in the Stoxx 600, falling 2.4% over "ve days.

Before last week they had started the year with a 5.5% gain.

"Airlines have had a tremendous performance with the fall of the oil price, " Petercam's Leroy said. "If oil spikes up again we could see some underperformance in airlines."

Statoil led an advance in European energy companies as the price of crude oil rose 5.5% to $55.03 a barrel last week, following "ve consecutive weeks of losses.

The price of oil reached a one-anda-half-year low on 18 January. Statoil gained 4.3%.

Among reports that will give investors clues about the state of the US economy this week, the Bureau of Economic Analysis releases fourth-quarter gross domestic product on Wednesday, only hours before the Federal Reserve is due to decide on whether to change its benchmark interest rate from 5.25%.

Data about the European economy due this week include unemployment and con"dence indicators for the 13 nations sharing the euro on Wednesday.

Bloomberg