March 26 (Bloomberg) -- European stocks snapped the longest rally this year after new-home sales in the U.S. unexpectedly fell in February to the lowest since 2000.

DaimlerChrysler AG and HSBC Holdings Plc and ING Groep NV led a drop by companies most dependent on the U.S. for sales on speculation growth is slowing in the world's biggest economy.

``These numbers were certainly worse than the market anticipated,'' said Henk Potts, a fund manager at Barclays Stockbrokers in London, which manages $45 billion. ``It's adding to concern about what is happening in the U.S. housing market.''

The Dow Jones Stoxx 600 Index lost 0.8 percent to 372.85 at the close in London, sliding for the first time in eight days. The Stoxx 50 fell 1.1 percent and the Euro Stoxx 50, a measure for the 13 nations sharing the euro, declined 1.2 percent.

Purchases of new homes in the U.S. dropped 3.9 percent to an annual pace of 848,000 last month, the Commerce Department said, while the supply of unsold homes at the current sales pace rose to the highest in 16 years.

``The housing market data brings back concerns about a slowdown in the U.S.,'' said Philipp Musil, who helps oversee $24 billion at Vienna-based Constantia Privatbank AG. ``Too many people have been waiting for the second wave'' correction.

Endesa SA limited declines after Enel SpA and Acciona SA said they would trump a rival bid from E.ON AG for the Spanish power company.

National benchmarks fell in 14 of 18 western European markets. The U.K.'s FTSE 100 dropped 0.8 percent. France's CAC 40 slid 1 percent while Germany's DAX slipped 1 percent.

DaimlerChrysler, which makes most of its sales in the U.S, dropped 2.9 percent to 60.23 euros.

HSBC, Volkswagen

HSBC, Europe's biggest bank by market value, declined 1.2 percent to 887.5 pence. The bank set aside 20 percent more than analysts estimated to cover 2006 loan defaults in the U.S.

ING, the largest Dutch bank, fell 2.8 percent to 31.53 euros. The company makes most of its revenue in the U.S.

Volkswagen AG dropped 3.2 percent to 113.95 euros as Porsche AG raised its stake in the region's biggest carmaker for less than the market value of the shares.

Porsche, the world's most profitable carmaker, exercised an option to raise its stake in Volkswagen AG to 30.9 percent, triggering a requirement for a takeover bid as it tightens control over Europe's biggest carmaker.

Porsche paid 100.92 euros a share for the 3.6 percent stake, Porsche spokesman Frank Gaube said. That's 14 percent less than the share's March 23 close. Porsche is offering the same amount for the rest of the carmaker.

`Few Opportunities'

Barclays Plc fell 2.2 percent to 741.5 pence. The U.K.'s third-biggest bank's plan to buy ABN Amro Holding NV may fail to boost profits and offer few opportunities for savings, investors in the U.K. company said.

``I just can't see this looking particularly attractive,'' said Philip Gibbs, who helps oversee $37 billion and holds Barclays stock at London-based Jupiter Asset Management. ``They would be better off buying back their own shares,'' because the deal would be ``dilutive'' to earnings, he said.

Barclays said March 20 it was in exclusive talks to buy ABN Amro in a deal that would ``create value for both sets of shareholders.'' ABN Amro added 1.6 percent to 33.02 euros.

Endesa advanced 3.7 percent to 40.06 euros. Enel and Acciona, one of Endesa's largest shareholders, announced they would bid at least 41 euros for each Endesa share, trumping a rival bid from E.ON, Germany's biggest utility.

The bid by Enel and Acciona, which together control 46 percent of Endesa, values all of Spain's largest power utility at a minimum of 43.4 billion euros ($57.87 billion.)

`Positive Impulses'

``Takeovers still deliver positive impulses,'' said Michael Scholz, an equity strategist at WestLB in Dusseldorf. ``There is ample liquidity looking for investment.''

George Wimpey Plc advanced 2.8 percent to 653 pence after soaring as much as 19 percent. The U.K.'s third-largest builder by houses sold will merge with Taylor Woodrow Plc.

The tie-up will create a company with a value of about 5 billion pounds ($9.81 billion). Taylor Woodrow surged 13 percent to 475 pence, the biggest gain on the Stoxx 600. Persimmon Plc, Britain's biggest homebuilder, rose 2.6 percent to 1,437 pence.

Phonak AG fell 4 percent to 91.75 Swiss francs after German authorities opposed the Swiss company's plan to buy the hearing aid division of GN Store Nord A/S. GN Store Nord's shares lost 3.9 percent to 81.25 Danish kroner.

Rank, Eiffage

Rank Group Plc, Britain's second-largest casino company, tumbled 1.7 percent to 201 pence as analysts cut their recommendations and stock-price estimates after the government raised taxes on gambling.

Eiffage SA, France's third-biggest construction company, climbed 10 percent to 115.89 euros.

The stock on March 22 jumped by the most in at least 17 years on speculation that Vinci SA or Sacyr Vallehermoso SA planned a takeover bid. Sacyr a day earlier denied it was planning an approach, and Vinci and Eiffage declined to comment.

To contact the reporter on this story: Andreas Hippin in Frankfurt at ahippin@bloomberg.net.

Last Updated: March 26, 2007 12:07 EDT