Nov. 10 (Bloomberg) -- European stocks fell for the first time in five days after a bigger-than-forecast decline in German investor confidence overshadowed earnings from HSBC Holdings Plc, the region’s biggest bank.

Barclays Plc slid 5.1 percent after the U.K.’s second- largest bank posted a 54 drop in net income. CRH Plc tumbled 2.2 percent as the world’s second-biggest maker and distributor of building materials forecast profit this year will slide as much as 55 percent. HSBC rallied 4 percent as the lender said third- quarter profit was “significantly” higher than a year ago on lower loan provisions.

The Dow Jones Stoxx 600 Index slipped 0.2 percent to 245.31, having fluctuated between gains and losses at least 15 times today. The measure has advanced 55 percent since this year’s low on March 9 amid speculation government stimulus measures and record-low interest rates are helping to drag the economy out of recession.

“I can’t see the market collapsing but we can probably expect more volatility,” said Andrea Williams, who helps manage 1.2 billion pounds ($2 billion) at Royal London Asset Management in London. “The market still offers good value.”

Stocks pared their advance after Germany’s ZEW Center for European Economic Research said its index of investor and analyst expectations, which aims to predict developments six months ahead, dropped to 51.1 this month from 56 in October. The median forecast in a Bloomberg News survey of 39 economists was for a reading of 55.

National Indexes

National benchmark indexes retreated in all 18 western European markets, except France and Luxembourg. The U.K.’s FTSE 100 and Germany’s DAX both lost 0.1 percent, while France’s CAC 40 was little changed.

The Stoxx 600 is trading at more than 55 times the reported earnings of its companies, near the most expensive level since 2003, according to data compiled by Bloomberg.

Barclays retreated 5.1 percent to 325.35 pence after posting a 54 percent drop in third-quarter net income to 1.08 billion pounds ($1.8 billion) and saying nine-month impairments were “significantly above” the year-earlier period.

Impairments for the full year are “expected to be around the bottom end of the previously referenced 2009 consensus range of 9 billion pounds to 9.6 billion pounds” made in August, the bank said.

CRH Slides

CRH lost 2.2 percent to 17.51 euros in Dublin after forecasting lower profit on costs to cut jobs and as poor weather in parts of the U.S. hampered construction. Pretax profit will probably reach 730 million euros ($1.1 billion) to 760 million euros, compared with 1.63 billion euros in 2008 and exchange-rate losses will also weigh on earnings, CRH said.

HSBC rallied 4 percent to 720 pence as the bank said impairments declined in the third quarter to the lowest level since the first half of 2008. Profit so far this year is higher than 2008 on an underlying basis that excludes movements in fair value on the bank’s debt, HSBC said.

Strategists at Credit Suisse recommended investors increase their holdings in mainland European shares, upgrading the region to “overweight” from “underweight.”

“Continental Europe tends to outperform when both global lead indicators rise and earnings are being revised up, a combination we expect to continue into the first half of 2010,” strategists including Andrew Garthwaite wrote in a report today. “Europe tends to outperform when interest rate expectations start to rise.”

VW Drops

Volkswagen AG common stock slid 8 percent to 102 euros, and the preferred shares sank 16 percent to 60.22 euros, the biggest drop in a year. Credit Suisse Group AG and Goldman Sachs Group Inc. said they sold 25 million preferred Volkswagen shares that were controlled by Qatar Holding LLC through options contracts at 60 euros each.

Prysmian SpA slumped 8.2 percent to 11.84 euros after Goldman Sachs sold shares in the world’s second-biggest cable maker. Prysmian (Lux) said it disposed of 25.1 million shares and Goldman Sachs sold 872,181 shares.

Sodexo, the world’s second-largest catering company, sank 5.3 percent to 39.01 euros as Chief Executive Officer Michel Landel said the financial crisis had slowed new business development and the impact will continue into next year. Net income in the 12 months through August rose 4.5 percent to 393 million euros, the company said.

Genmab, Cookson

Genmab A/S plummeted 12 percent to 100.5 kroner, the biggest decline on the Stoxx 600. Credit Suisse Group AG lowered its recommendation for the Danish biotechnology company to “underperform” from “neutral” because of a reduced peak sales forecast for its Arzerra leukemia treatment.

Cookson Group Plc surged 9.3 percent to 430.1 pence, making it the best performer on the Stoxx 600. The world’s biggest maker of ceramic linings for metal smelters said it expects trading profit for the full year to be “around the upper end” of analyst estimates. The company added that it’s confident it will be in full compliance with the financial covenants contained in its debt facilities at Dec. 31.

Bilfinger Berger AG rallied 7.6 percent to 52 euros. WestLB AG raised its recommendation for Germany’s second-biggest builder to “buy” from “add” after the company reported third-quarter earnings.

Sonova Holding AG surged 6.7 percent to 120 Swiss francs. The maker of Phonak hearing aids raised its full-year outlook after reporting a 22 percent increase in first-half income.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.

Last Updated: November 10, 2009 12:08 EST