June 26 (Bloomberg) -- European stocks fell the most in three months on concern credit losses will reduce bank earnings, while slowing economic growth curbs profits for retailers.

Fortis tumbled 19 percent on plans to raise $2.4 billion of equity and cancel a dividend to boost solvency. Carrefour SA led retailers to their steepest retreat since January after analysts downgraded the stock and French consumer confidence slumped to a record low in June. Adidas AG, the world's second-largest sporting-goods maker, dropped as Nike Inc. said orders stagnated in the U.S.

The Dow Jones Stoxx 600 lost 2.6 percent to 288.48 in London, bringing this year's decline to 21 percent. The Stoxx 50 fell 2.4 percent and the Euro Stoxx 50, a measure for the euro region, sank 2.7 percent.

``There is still a lot of nervousness out there,'' said Peter Jarvis, a London-based director of European equities at F&C Asset Management, which has about $200 billion. ``Losses are going to continue. We still haven't seen the hit to earnings downgrades that we would expect.''

The Stoxx 600 has tumbled 10 percent this month, on course for the worst June since at least 1987. Record oil prices and accelerating inflation have stoked concern central banks will keep borrowing costs high or raise them as credit losses and writedowns approaching $400 billion stifle economic and profit growth.

Goldman Sachs Group Inc. predicted that Citigroup Inc., the bank that's reported the biggest losses from the collapse of the U.S. mortgage market, may post $8.9 billion more in writedowns in the second quarter and recommended selling the shares.

Interest Rates

European Central Bank President Jean-Claude Trichet reiterated yesterday policy makers may raise their key rate from a six-year high next month to curb price increases. The Federal Reserve kept rates unchanged yesterday, after a series of seven reductions, saying ``upside risks'' to prices have increased.

National indexes declined in all 18 western European markets. The U.K.'s FTSE 100 slipped 2.6 percent. France's CAC 40 fell 2.4 percent, as did Germany's DAX.

Fortis dropped 2.39 euros to 10.26. The company will raise 1.5 billion euros ($2.4 billion) of equity. The measures will increase solvency by 8 billion euros, the company said.

The Stoxx 600 Banks Index has fallen 32 percent this year, the worst-performing industry in Europe, as banks cut their workforce and sell shares to shore up their balance sheets. Financial firms have raised a total of $314 billion in the past year and have announced plans to trim more than 83,000 jobs since last July, according to figures compiled by Bloomberg.

Earnings Estimates

Earnings for banks in the Stoxx 600 will decline 14 percent this year, according to analysts' estimates compiled by Bloomberg. That's down from a 2 percent drop forecast at the end of last year.

UBS AG, the European bank with the biggest losses from the U.S. subprime mortgage contagion, slipped 4 percent to 22.98 francs. Royal Bank of Scotland Group Plc, which earlier this month raised 12.3 billion pounds ($24 billion) in a rights offer, retreated 4.9 percent to 218 pence.

Carrefour, the world's second-biggest food retailer, fell 8.8 percent to 37.88 euros. JPMorgan Chase & Co. cut its recommendation to ``neutral'' from ``overweight,'' while Merrill Lynch & Co. lowered its rating to ``neutral'' from ``buy.''

Consumer confidence in France declined this month as the fastest inflation in 12 years eroded households' purchasing power. A gauge of Italian business confidence slumped to the lowest in almost three years this month as orders were curbed by slowing economic growth, rising energy costs and a stronger euro.

DSG International

DSG International Plc tumbled 5.6 percent to 42.5 pence. The biggest U.K. consumer-electronics retailer reported its first annual loss since 1994 after writing down the value of its money- losing Italian unit.

The Stoxx 600 Retail Index slipped 4.4 percent today, the steepest drop since January.

Adidas, the world's second-largest sporting-goods maker, declined 4 percent to 41.12 euros. Nike Inc., the world's biggest athletic-shoe maker, said orders for delivery of goods through November in the U.S. were unchanged.

British Sky Broadcasting Group Plc retreated 4.9 percent to 470.75 pence, the lowest in almost four years. JPMorgan cut the stock to ``underweight'' from ``overweight,'' citing risks from a slowdown in sales and a ``poor'' economic environment.

Inmarsat Plc gained 2.9 percent to 500 pence, the highest since February, on speculation the U.K. satellite company that provides communications services may receive a bid.

``There is a rumor they are in advanced talks,'' Scott Sandat, head of sales trading at spread-betting company City Index in London, said in a telephone interview. ``A price of 550 pence has been mentioned. As to who the bidders would be, I have no idea.''

Chris McLaughlin, Inmarsat's vice president of external affairs, declined to comment on market speculation via phone today.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.

Last Updated: June 26, 2008 12:06 EDT