Xstrata paced a decline by mining companies and Credit Suisse Group led "nancial stocks lower, among industries most sensitive to slowing growth.

"Fears over the cooling Chinese equity market took hold and speculation escalated over a possible US recession, " said Angus Rigby, chief executive at TD Waterhouse, a "nancial services "rm in London. "It has sent ripples through the entire global market."

The global sell-off, which wiped more than $1.5 trillion off the value of global equities, started in China on concern the government of the world's fastest-growing major economy will tighten controls on investment. Declines were accentuated as US economic data pointed to slowing growth in the biggest economy and former Federal Reserve chairman Alan Greenspan said a recession in the US is possible.

The Stoxx 600 lost 5.2% to 360.67, its worst weekly decline since March 2003. The Stoxx 50 fell 5.3% and the Euro Stoxx 50, a gauge for the 13 nations using the euro, dropped 5.5%. National benchmarks declined across Europe. Germany's DAX dropped 5.6% and the UK's FTSE 100 slid 4.5%. France's CAC 40 fell 5.1%.

The previous week, the Stoxx 600 reached its highest in more than six years amid speculation earnings growth and increased takeovers would help extend a four-year rally in markets.

"Everybody was forecasting a correction. China just catalysed the setback, " said Andrew Bell, European equity strategist at Rensburg Sheppards in London, which oversees the equivalent of $11.9bn. "There has been a general selling of risky assets as people try to downsize their risks."

Xstrata, the world's fourthlargest copper producer, plunged 11%. BHP Billiton, the world's largest mining company, retreated 9.4%. Rio Tinto, the world's thirdlargest, dropped 7.6%.

Credit Suisse, Switzerland's second-biggest bank, lost 7.9%.

Merrill Lynch & Co lowered its recommendation for the bank's shares to 'neutral' from 'buy'.

Deutsche Bank, Germany's biggest bank, retreated 7.9%. Merrill lowered its recommendation on the shares, citing a deterioration in "customer risk appetites".

Aviva, the UK's biggest insurer, tumbled 7.6% after pro"tability of new business declined in the second half. Pro"t margins on new policies fell to 2.6% from 2.8%.

Shares of Munich Re dropped 6.2%. The world's second-largest reinsurer said fourth-quarter pro"t declined 52% to Euro641m, missing the Euro655m median estimate of 16 analysts surveyed by Bloomberg.

European Aeronautic Defence and Space Co, which controls planemaker Airbus, tumbled 8.6%. Germany's IG Metall labour union, the biggest manufacturing workers' lobby in Europe, said it refused to accept cost-cutting measures at Airbus that may lead to 10,000 job losses.

Airbus chief executive Louis Gallois said on Wednesday the world's biggest maker of commercial planes will slash Euro2.1bn from annual costs by 2010.

SAP, the world's largest maker of business-management software, gained 1.4 % after a report in Wirtschaftswoche that buyout "rm Silver Lake Partners wants to buy a stake in the company from its founders. The SAP founders are "open" to the offer, the paper said.

E.ON, Germany's largest utility, dropped 11% after Enel agreed to buy almost 22 % of Endesa, hampering E.ON's chances of winning the 50% required for its Euro41bn bid, which would be the largest utility takeover ever to succeed.

Bloomberg