EUROPEAN stocks snapped a two-week advance last week amid concern that an economic slowdown and record oil prices will curb earnings growth.

Deutsche Boerse AG, the region's biggest exchange by market value, and HBOS Plc, the UK's largest mortgage lender, led financial shares lower. DSG International Plc, the biggest UK consumer electronics retailer, paced a fall in consumer stocks after cutting its earnings forecast.

The Dow Jones Stoxx 600 Index dropped 2.6 percent to 310.74. The benchmark has fallen 22 percent from last year's high on June 1 on speculation US$245 billion in losses and writedowns related to the collapse of United States subprime mortgages will hurt profits at financial firms and drag down global economic growth.

"Recent investor psychology was that the worst of the financial liquidity crisis is over, but in reality, it is recessionary fears that could drive this market to new lows," Jason McNab, who helps manage about US$1.7 billion at Duet Asset Management Ltd in London, told Bloomberg News. Analysts last week forecast for the first time that European companies' earnings will shrink this year.

Crude oil futures in New York climbed to a record US$112.21 a barrel last Wednesday after the US Energy Department reported an unexpected decline in American inventories.

Germany's DAX Index fell 2.4 percent, while France's CAC 40 lost 2.1 percent. The UK's FTSE 100 shed 0.9 percent. The Stoxx 50 retreated 2.5 percent.