Expectations that borrowing costs will rise snapped the rally that last week lifted the Dow Jones Stoxx 600 index to its highest since September 2000.

The index dropped "ve straight days on the prospect that rates will increase worldwide.

ECB policy makers, led by bank president Jean-Claude Trichet, on Wednesday raised the benchmark rate by a quarterpoint to 4%, the highest since August 2001.

The Stoxx 600 lost 3.8% this week for its biggest decline since the "ve days ended 2 March, the week of a global equities rout sparked by falls in China. The Stoxx 50 tumbled 3%, and the Euro Stoxx 50, a gauge for the 13 nations using the euro, retreated 4%.

All 18 industry groups in the Stoxx 600 slipped, with "nancial services companies declining the most. UBS sank 5.9%. E. on dropped 7.2%. Deutsche Bank, Germany's biggest bank, fell 6%. Axa, Europe's number two, lost 5.6%. France Telecom, Europe's secondlargest phone company, retreated 9.3%.

National benchmarks fell in all of the 18 western European markets. Germany's DAX lost 5%.

France's CAC 40 sank 4.6%, and the UK's FTSE 100 declined 2.6%.

Pro"t growth in Europe is expected to slow to 7.1% in 2007 from 14.6% last year, according to FactSet Research Systems in London.

US treasuries dropped this week, pushing 10-year yields, which determine interest rates on mortgages and corporate bonds, to the highest since May 2002.

The yield on the 4.5% security due in May 2017 reached as high as 5.25%. It breached 5% on Friday for the "rst time since August after rate increases in Europe and New Zealand.

Ryanair sank 10%. The airline forecast pro"t will grow at the slowest rate in four years in "scal 2008 as the company slashes ticket prices to attract passengers. Net income will climb about 5%, with a possible loss in the second half, as average fares fall 5%, chief executive Michael O'Leary said on Tuesday.

British Airways, the region's third-largest airline, slid 8.3%. Passenger traf"c fell 2.1% in May as demand on transatlantic routes slumped, the company said on Tuesday.

Banca Italease tumbled 32%. The Italian leasing company said the potential losses its customers are facing on derivatives contracts rose 50% in two weeks, reaching Euro600m as of Tuesday.

Italease, whose chief executive quit this week amid a criminal probe, makes commissions by selling derivatives from outside suppliers to clients with mortgages or leasing contracts.

Royal Ahold added 1.6%.

The Dutch owner of US supermarket chains Stop & Shop and Giant said on Thursday that "rst-quarter pro"t fell 2% to Euro241m after it cut prices and renovated outlets to keep US shoppers from defecting to WalMart. That beat the Euro228m median estimate of 13 analysts surveyed by Bloomberg News.

Shares of Carphone Warehouse on Tuesday gained the most in six months after Europe's largest mobile phone retailer said it will sell its broadband services more actively after addressing customer service problems. The stock rose 7.9% for the week.

BNP Paribas, France's biggest bank, added as much as 3.7% in the last trading day of the week after a report in French daily Les Echos that smaller rival Soci�t� G�n�rale is studying a possible bid.

Bloomberg