BHP Billiton led mining stocks lower as shares of industries most sensitive to economic growth retreated. Royal Bank of Scotland dropped as it led a group planning to make an unsolicited offer for ABN Amro.

"The market has been very strong, but you are going to get some profit-taking, particularly when the US economic data is quite weak, " said James Buckley, a London-based director at Baring Asset Management. "Corporate news flow has been supportive because of M&A and particularly earnings."

The Dow Jones Stoxx 600 Index fell 0.8% to 386.1. The Stoxx 50 dropped 1.1% and the Euro Stoxx 50, a measure for the 13 nations sharing the euro, declined 0.8%. Shares of AstraZeneca lost the most among Stoxx 50 members after the UK drugmaker agreed to buy US-based MedImmune for $15.2bn.

J Sainsbury rallied after a block of the company's stock was acquired, stoking speculation of a takeover bid. Michelin and France Telecom gained after reporting higher "rst-quarter sales.

Takeovers helped lift the Stoxx 600 to the highest in six-and-a-half years last week. So far in 2007, mergers in Europe have totaled $918bn, according to data compiled by Bloomberg. They reached a record $1.6 trillion in 2006.

National benchmarks fell in 11 out of 18 western European markets.

The UK's FTSE 100 Index lost 1.1%, France's CAC 40 slid 0.1% and Germany's DAX Index rose 0.5%.

"The market is ripe for a correction, " said Gerard AugustinNormand, managing director of Richelieu Finance, which oversees $5bn in Paris. "There are worries about interest rates and growth in the US, so the potential for gains is limited."

The world's largest economy grew last quarter at the slowest pace in four years because of a housing slump and bigger trade deficit. The 1.3% annual growth rate was less than forecast and followed a 2.5% fourth-quarter pace, the Commerce Department reported. The dollar reached a record low against the euro.

Royal Bank slipped 4.3% to 1940 pence. The UK bank, Santander Central Hispano and Fortis announced plans to make an unsolicited offer for ABN Amro, escalating the fight with Barclays for control of the biggest Dutch bank.

The group indicated on 25 April that it would offer 72.2bn, trumping Barclays's all-share bid. Shares of Barclays declined 3.3% to 725.5 pence, while Santander lost 4.6% to 13.21. Fortis retreated 2.8% to 33.50.

The market's reaction to deals "really comes down to the price being paid and industrial logic, " Baring's Buckley said.

ABN Amro climbed 1.3% to 36.75. The bank said it's actively soliciting alternative bids for its USbased LaSalle Bank, which it agreed to sell to Bank of America for $21 bn.

Sainsbury, the third-largest UK grocery chain, jumped 6.9% to 568.5 pence. The �1.4bn ($2.8 bn) block of shares was acquired on 25 April. About 248.7m shares traded at 575 pence, 8.5% above the previous day's close. The stake is almost equal to that held by AllianceBernstein, the largest shareholder.

France Telecom climbed 2.1% to 21.46. Europe's third-largest phone company said sales unexpectedly rose 1.8%, surpassing analysts' estimates. They were lifted by revenue from mobile services in emerging markets including Egypt and Senegal.