SAP, Axa and Lafarge led declines by companies reliant on sales in the US.

British Airways retreated as the climb in oil prices raised fuel costs.

The Dow Jones Stoxx 600 index decreased 0.5% this week to 374.22. The measure rose 2.5% in the first three months of the year, its third consecutive quarterly advance. The Stoxx 50 fell 0.9% and the Euro Stoxx 50 dropped 0.3%. France's CAC 40 fell less than 0.1% while Germany's DAX increased 0.3%. The UK's FTSE 100 fell 0.5%.

Vodafone led telecom shares lower after reporting shrinking profit margins and saying competitive and regulatory pressure will continue in Europe.

Reports showed that US home sales unexpectedly declined and consumer confidence slid more than economists forecast. The data deepened concern that a housing crisis will stifle growth in Europe's largest export market.

Stocks extended losses after Federal Reserve chairman Ben Bernanke said inflation remains "uncomfortably high" and uncertainties about growth outlook have rise.

Earnings growth of Stoxx 600 companies will slow to 6.2% on average this year compared with 14.6% for 2006, according to FactSet Research Systems' estimates.

SAP, which gets 28% of its revenue from the US, retreated 2.6%. Axa, which receives about 16% of sales from North America, lost 1.5%. Lafarge fell 0.5%.

British Airways fell 6.2%.

About 30% of airline costs relate to oil prices, according to research by Credit Suisse Group. BP added 1.9%. Lundin Petroleum increased 1.9%.

Crude oil traded near a six-month high as 15 British naval personnel seized in the Persian Gulf remained in Iranian custody for an eighth day, heightening concern the standoff will threaten oil shipments from the region.

Vodafone shares slipped 4.1% on concern that operating profit margins in the UK are shrinking.

The company also warned competitive and regulatory pressure will continue in Europe in fiscal 2008.

"While revenue growth is probably ahead of expectations, the Ebitda margin appears to be lower, " said Jesper Kruger, who helps manage $64bn as an investment manager at ATP in Copenhagen. "It would appear that the days of 30% margins in the UK are over."

BTslid 1.1%. Telekom Austria dropped 0.7%.

Scottish & Newcastle, the UK's largest brewer, surged 9.9% on speculation the company may get a bid from Heineken NV.