Feb. 16 (Bloomberg) -- Dow Jones Industrial Average stocks fell in Europe in advance of a Federal Reserve report that may show the pace of industrial production slowed last month. Caterpillar Inc. and General Motors Corp. slipped.

``The economy is clearly not as strong as it was last year,'' said Pascal Lebois, who manages a $250-million U.S. equities fund at ING Luxembourg SA in Luxembourg. ``It is not the best environment for equities.''

Hewlett-Packard Co., the world's No. 2 maker of personal computers, and Coca-Cola Co. slid before releasing earnings. Stock- index futures fell ahead of Federal Reserve Chairman Alan Greenspan's semi-annual testimony before Congress today.

Twenty of the 23 Dow average stocks trading in Europe fell as of 9:25 a.m. in London. Dow average futures expiring in March slipped 21 to 10,817. Standard & Poor's 500 Index futures slid 2 to 1208.7 and Nasdaq-100 Index futures lost 2 to 1547.

A slowdown in industrial output may reflect a decline in production at automakers and utilities, economists said. Corporate earnings are forecast to expand more slowly than last year, as the U.S. economy is expected to cool after growing 4.4 percent in 2004, the most in five years.

S&P 500 earnings growth is forecast to slow to 9.6 percent in 2005 from 20 percent last year, according to Thomson Financial.

``You need faster profits growth for the market to go much higher,'' ING Luxembourg's Lebois said. He said he favors energy- related stocks including Transocean Inc., the world's largest offshore oil driller.

Industrial Output

Industrial output is forecast to have risen 0.3 percent in January, according to the median estimate of 74 economists surveyed by Bloomberg News, compared with an increase of 0.8 percent in December. The Fed issues the report at 9:15 a.m. in Washington.

Caterpillar, the world's biggest maker of earth moving machinery, fell 38 cents to $91.12 in Germany. GM, the world's largest automaker, dropped 13 cents to $37.09.

Hewlett-Packard, a week after ousting Chief Executive Carly Fiorina for failing to fuel growth, will likely say today that first-quarter sales rose 7.4 percent, less than half as fast as revenue at Dell Inc.

Sales at Hewlett-Packard probably increased to $21 billion, the average estimate of 20 analysts surveyed by Thomson Financial. Profit, excluding some items, may have risen to 34 cents a share, analysts said. The shares dropped 9 cents to $21.03 in Germany. Its earnings are scheduled for release after U.S. markets close.

Coca-Cola fell 4 cents to $42.61. The world's largest soft drink maker is expected to report a fourth-quarter profit of 40 cents a share, down from 46 cents a year earlier, before some gains and losses, a survey of analysts by Thomson Financial showed. The report is expected before trading begins in the U.S.

Home Depot

Among other Dow stocks that fell in Europe, Home Depot Inc., the world's largest home-improvement retailer, slipped 28 cents to $42.45.

Applied Materials Inc. rose 14 cents to $17.63. The world's biggest maker of semiconductor-production equipment said after markets closed yesterday that first-quarter profit more than tripled.

Greenspan testifies before the Senate's banking committee today and the House's on Feb. 17. He will face questions on the country's record budget and trade deficits, and Social Security. He may also comment on forecasts for economic growth.

U.S. stocks rose yesterday as Circuit City Stores Inc. received a $3.25 billion takeover offer, adding to the busiest start to a year for acquisitions since 2000.

The S&P 500 added 0.3 percent to 1210.12. The Dow average rose 0.4 percent to 10,837.32. Both reached new highs for the year. The Nasdaq Composite Index advanced 0.3 percent.

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.

Last Updated: February 16, 2005 04:30 EST