Oct. 16 (Bloomberg) -- European stocks retreated from a one-year high as results from General Electric Co. and Bank of America Corp. disappointed investors and U.S. consumer confidence dropped more than forecast.

National Bank of Greece SA led the nation’s lenders lower after the government said it may impose a one-off tax on company earnings. Safran SA, which makes commercial jet engines with GE, sank 5.9 percent after saying 2010 will be a “challenging” year. National Express Group Plc fell the most in 8 years as CVC Capital Partners Ltd. scrapped a takeover bid for the U.K. bus and rail company.

The Dow Jones Stoxx 600 Index retreated 0.7 percent to 245.58 after closing yesterday at the highest level since Oct. 3, 2008. The regional gauge trimmed its weekly advance to 1.2 percent today as GE’s sales trailed estimates and Bank of America posted a loss.

“People were really hoping for very, very good numbers,” said Bill Dinning, head of investment strategist at Aegon Asset Management in Edinburgh. “So often when you get that sort of anticipation the market can get disappointed. Even if we go through a consolidation phase, it looks like we’re going to come out of the earnings season looking fairly healthy.”

The Stoxx 600 has advanced 55 percent since March 9, as companies from Royal Philips Electronics NV to Google Inc. reported better-than-estimated earnings, pushing the index’s valuation to 48.8 times reported profit, near the most expensive level since 2003, according to Bloomberg data.

Consumer Sentiment

Confidence among U.S. consumers fell more than forecast in October, a reminder that households remain nervous about the strength of the emerging economic recovery. The Reuters/University of Michigan preliminary index of consumer sentiment decreased to 69.4 from 73.5 the month before, missing economists’ forecasts for a reading of 73.3.

The U.K.’s FTSE 100 dropped 0.6 percent and France’s CAC 40 sank 1.5 percent. Germany’s DAX slid 1.5 percent as Deutsche Bank AG retreated.

Greece’s ASE Index plummeted 2.2 percent as the Finance Ministry said it’s considering imposing a one-off tax on profits from banks and other companies to reduce the budget deficit.

National Bank of Greece, the country’s biggest lender, sank 3.6 percent to 26.80 euros as Morgan Stanley also downgraded the shares to “equal weight” from “overweight.” Alpha Bank SA, the third-biggest, dropped 6.4 percent to 13.10 euros.

Bank of America

A gauge of banks on the Stoxx 600 declined 1.4 percent as Bank of America, the biggest U.S. lender, posted a $1 billion third-quarter loss. Deutsche Bank AG, Germany’s largest bank, lost 2.8 percent to 54.83 euros and BNP Paribas SA, the largest lender in France, sank 2.7 percent to 54.70 euros.

Safran plummeted 5.9 percent to 12 euros after saying 2010 will be “challenging.” The company is on course to meet a 2009 target for an operating margin of 6 percent, Chief Executive Officer Jean-Paul Herteman said on a call today. The margin stood at 6.3 percent last year.

Siemens AG, Europe’s largest engineering company, retreated 2.8 percent to 66.56 euros as GE, the world’s biggest maker of jet engines, said third-quarter revenue fell 20 percent to $37.8 billion, trailing analysts estimates.

National Express tumbled 23 percent to 362 pence, the biggest drop since October 2001, after CVC Capital decided not to make a 765 million-pound ($1.25 billion) offer. National Express said a stock sale is now “the most appropriate course of action.”

Petroplus, Neste

Petroplus Holdings AG, the largest refiner in Europe, surged 4.6 percent to 27.94 Swiss francs, while Neste Oil Oyj climbed 4.8 percent to 13.30 euros and Tullow Oil Plc added 1.8 percent to 1,236 pence.

Crude oil traded above $77 a barrel in New York on an unexpected decline in U.S. gasoline stockpiles and refinery utilization yesterday.

Swedish Match AB, Europe’s largest maker of smokeless tobacco products, jumped 3.8 percent to 151.50 kronor on speculation Philip Morris International Inc. will make a takeover bid for the company.

“There is a rumor that Philip Morris is showing interest in Swedish Match, and the level mentioned is 182 kronor,” said Michael Arnhuvud, a trader at Swedbank AB. Philip Morris spokeswoman Marija Sepic declined to comment, as did Swedish Match spokeswoman Rupini Bergstroem.

Ericsson AB rose 2 percent to 72.60 kronor after Sony Ericsson Mobile Communications Ltd. reported third-quarter net loss of 164 million euros ($245 million), less than analysts anticipated.

Lloyds Gains

Lloyds Banking Group Plc advanced 1.9 percent to 93.1 pence as Deutsche Bank upgraded the lender to “buy” from “hold,” citing the shares’ valuation. Analyst Jason Napier boosted his price estimate to 115 pence from 100 pence in a note to investors. Morgan Stanley also raised its recommendation for the U.K.’s biggest mortgage lender to “equal weight.”

Swiss Life Holding AG climbed 4.5 percent to 140.2 francs after Citigroup Inc. raised its recommendation for Switzerland’s biggest life insurer to “buy” from “hold.” The analysts increased their price estimate on the shares by 33 percent to 160 francs.

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

Last Updated: October 16, 2009 12:55 EDT