Feb. 28 (Bloomberg) -- European stocks had the biggest two- day drop in 4 1/2 years, extending a slump that wiped more than $1 trillion off the value of global equities.

Xstrata Plc, Anglo American Plc and Credit Suisse Group continued their slide after a sell-off in the Chinese market yesterday pushed U.S. stocks to their biggest rout in four years. Asian stocks fell the most in eight months today.

``It's not pretty,'' said Andrew Popper, chief investment officer at SG Hambros in London, who helps manage the equivalent of $13.7 billion. ``The Chinese stock market certainly shouldn't dictate direction so the fact is markets were looking for an excuse. We were due a correction.''

The Dow Jones Stoxx 600 Index lost 1.5 percent to 365.04 at the close in London after earlier dropping as much as 2.2 percent. The measure had the biggest two-day loss since 2002. The Stoxx 50 fell 1.8 percent, and the Euro Stoxx 50, a measure for the 13 nations sharing the euro, slid 1.7 percent.

U.S. stocks recovered some losses today as strategists advised investors against selling equities given growth prospects. Chinese markets also pared some of yesterday's slide.

``This type of correction is very healthy,'' said Andreas Utermann, who oversees $1.5 trillion as the London-based global chief investment officer at AllianzGI. ``Once we see signs of stabilization, it will be a great buying opportunity.''

A global slide in markets started in China amid concern the government of the fastest-growing major economy will tighten controls on investment. Declines were accentuated as U.S. economic data pointed to slowing growth in the biggest economy.

Wiped Out

The Stoxx 600 Index fell 3 percent yesterday, the biggest decline since May 2003. The drop erased $360 billion in value off the benchmark. U.S. stocks wiped out about $600 billion in market value and erased all of 2007's gains.

Asian markets today extended the slump, wiping at least $280 billion off the region's equities.

The Stoxx 600 fell 2.1 percent in February, its biggest monthly drop since May, when markets were roiled by concern interest rates would increase.

National benchmarks slid in all 18 western European markets. France's CAC 40 declined 1.3 percent. The U.K.'s FTSE 100 lost 1.8 percent while Germany's DAX slipped 1.5 percent. The measure earlier fell as much as 2.6 percent.

``There's stabilization appearing,'' said Lucy MacDonald, chief investment officer of global equities at RCM in London, which oversees $100 billion. ``The drivers leading the market higher are still there. Some profit taking is entirely healthy.''

The Stoxx 600 reached its highest in more than six-years last week amid speculation earning growth and increased takeovers would help extend a four-year rally in markets.

Copper Falls

Xstrata, the world's fourth-largest copper producer, retreated 3.4 percent to 2,395 pence. Anglo American, the world's second-biggest mining company, fell 3.6 percent to 2,416 pence. Rio Tinto Plc, the third-largest mining company, slumped 2.3 percent to 2736 pence.

Copper fell for a third consecutive day in London, leading other industrial metals lower, on speculation demand will decline as economic expansion slows in China and the U.S. Copper in Shanghai fell by as much as 2.9 percent. The metal slid for a second consecutive day in New York.

Credit Suisse, Switzerland's second-biggest bank, lost 3 percent to 84.5 Swiss francs. Merrill Lynch & Co. lowered its recommendation for the bank's shares to ``neutral'' from ``buy.''

Deutsche Bank AG, Germany's biggest bank, retreated 3.3 percent to 99.25 euros. Merrill also lowered its recommendation for Deutsche Bank to ``neutral'' from ``buy,'' citing a deterioration in ``customer risk appetites.''

Boost Earnings

Munich Re slid 3.4 percent to 120.43 euros. The world's second-largest reinsurer, said fourth-quarter profit declined 52 percent to 641 million euros ($846.4 million) from a year earlier when asset sales boosted earnings. That missed the 655 million- euro median estimate of 16 analysts surveyed by Bloomberg.

E.ON AG, Germany's biggest utility, slid 4 percent to 99.14 euros. Italy's Enel SpA bought almost 10 percent of Endesa SA for about 4.13 billion euros, threatening E.ON's takeover of the Spanish power company.

Enel bought 105.8 million shares in Endesa for 39 euros apiece and said it is considering raising the stake to as much as 24.99 percent. Shares of Enel lost 2.6 percent to 7.90 euros.

``Sentiment appears to be the main driver of the market at the moment,'' said Ed Wallace, who helps manage $2 billion in global equities at Gartmore Investment Management in London. ``Little has changed with economic fundamentals.''

HBOS Plc slid 4.6 percent to 1081 pence. Britain's biggest mortgage lender posted a 26 percent gain in second-half profit and said lending margins may decline in 2007.

`Margin Decline'

``We anticipate some further margin decline in 2007'' due to competition in retail banking and mortgage lending, Chief Executive Officer Andy Hornby said in a statement.

Volkswagen AG, Europe's biggest carmaker, rallied 2.9 percent to 95.34 euros. The company's luxury car division, Audi AG, forecast record results in 2007 as profit surged last year on sales of new models including the Q7 sport-utility vehicle.

Carrefour SA, Europe's largest retailer, jumped 4.1 percent to 50.48 euros after Breaking Views reported that Chairman Luc Vandevelde considered a leveraged buyout of the company.

Vandevelde mulled a transaction with private-equity firms, Breaking Views said on its Web site, citing people familiar with the situation.

Bid Rebuffed

The Halley family, owner of the biggest stake in Paris-based Carrefour, rebuffed the idea, according to the Web site. Calls by Bloomberg to Carrefour's press office in Paris weren't immediately returned.

Agfa-Gevaert NV, Europe's largest maker of health-care information technology, dropped 5.5 percent to 16.84 euros. The company will split into three independent, publicly traded businesses this year to boost shareholder value and spur growth.

C&C Group Plc, the Irish maker of Magners cider and Tullamore Dew whiskey, plunged 9.7 percent to 10.50 euros, the worst performer on the Stoxx 600. The company forecast growth in annual profit that missed some analysts' estimates, triggering the stock's biggest drop in a month.

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

Last Updated: February 28, 2007 12:02 EST