European stocks fell the most in a week after record oil prices dimmed the earnings

European stocks fell the most in a week after record oil prices dimmed the earnings outlook for airlines and carmakers and a slowing housing market weighed on Schneider Electric's sales.
Air France-KLM and Daimler slipped the most in a week after crude climbed above $US117 a barrel. Schneider Electric, the world's biggest maker of circuit breakers, posted its biggest drop since January as sales missed analysts' estimates. Royal Bank of Scotland led banks lower after saying it may sell shares to shore up capital, while Barclays declined on a Merrill Lynch downgrade.
Europe's Dow Jones Stoxx 600 Index lost 1.2% to 316.96, extending this year's decline to 13% on concern that rising energy costs and $US290 billion in writedowns and credit losses at financial companies will cut profit growth.
''Oil prices account for a large proportion of costs for many companies,'' said Chirin Gill, a fund manager at Daiwa SB Investments in London, which has about $US60 billion. ''Prices are likely to be stronger for longer, which is hurting the stocks.''

European companies will see their earnings shrink in 2008 for the first time in six years, according to analysts' estimates compiled by Bloomberg. Profit for companies in the Stoxx 600 may drop 0.5%, the data show. That's down from 11% growth forecast at the end of last year.