June 23 (Bloomberg) -- Most European stocks fell as higher oil prices damped earnings prospects for carmakers and airlines, while concern deepened that profit outlooks for banks and property companies worsened.

Daimler AG, the world's second-biggest maker of luxury cars, and British Airways Plc retreated as oil climbed above $138 a barrel. UBS AG dropped the most in two weeks after Bank of America Corp. forecast a loss in the second quarter for the Swiss bank. Land Securities Group Plc sank to a 3 1/2-year low after U.K. house prices slumped by the most this year.

Gains by oil companies and drugmakers left the Dow Jones Stoxx 600 Index little changed, losing 0.1 percent to 294.81. The measure fell to a three-month low as two stocks declined for every one that rose.

``Automobile stocks and banks are what we most avoid,'' said Romain Boscher, a fund manager at Groupama Asset Management in Paris, which oversees $27 billion. ``Automakers are hurt by all of the problems the market is facing today, a weak dollar, the decline in consumer spending, the increase in oil prices.''

The Stoxx 600 has tumbled 19 percent this year on speculation higher inflation will keep policy makers from cutting borrowing costs, while credit-related losses approaching $400 billion erode economic and profit growth.

A report today showed German business confidence fell more than economists forecast in June.

National Benchmarks

National benchmark indexes decreased in 12 of the 17 western European markets that were open. The U.K.'s FTSE 100 gained 0.8 percent, and France's CAC 40 was little changed, while Germany's DAX added 0.2 percent.

Daimler lost 1.9 percent to 43.53 euros. Renault SA, France's second-largest carmaker, dropped 2.6 percent to 53.56 euros. Michelin & Cie., the world's second-biggest tiremaker, slipped 3.3 percent to 45.50 euros.

Credit Suisse Group AG cut its share-price forecasts for automakers, citing higher oil prices.

``Oil's impact on demand poses a greater threat than rising input costs, significantly increasing the risk of a 1970s-style shock to vehicle sales,'' the brokerage wrote in a note.

Crude climbed on signs that Saudi Arabia's output increase won't raise global supply because of production disruptions in Nigeria. Prices advanced as high as $138.13.

British Airways, Europe's third-biggest airline, dropped 3 percent to 212.25 pence.

Energy companies were the best-performing stocks among the 18 groups in the Stoxx 600.

Shell, Total

Royal Dutch Shell Plc, Europe's largest oil company, added 1.5 percent to 1,983 pence. Total SA, the region's third- biggest, climbed 2.1 percent to 52.725 euros.

UBS, which has reported the biggest losses among European banks from the collapse of the mortgage market, dropped 4.4 percent to 22.06 francs. The deficit at UBS will be $1.70 a share, not a profit of 31 cents as previously estimated, Bank of America analyst Michael Hecht said.

Land Securities, the U.K.'s biggest real estate investment trust, slid 4.8 percent to 1,275 pence, the lowest since November 2004. British Land Co., the U.K.'s largest property company by assets, sank 2.7 percent to 745 pence.

House prices declined in June as buyers shunned the market, deepening Britain's property slump, Rightmove Plc said. The average asking price for a home dropped 1.2 percent from May to 239,564 pounds ($473,000), Britain's most-used property Web site said in a statement today. Prices in London declined 1.4 percent.

Corio, HBOS

Corio NV retreated 4 percent to 50.14 euros. JPMorgan Chase & Co. analyst Harm Meijer downgraded the shares to ``underweight'' from ``neutral.''

HBOS Plc tumbled 4.3 percent to 270.25 pence. Citigroup Inc. cut its price estimate on the shares to 275 from 425 pence.

Shire Ltd. and Elan Corp. led drugmakers higher after Goldman Sachs Group Inc. added the stocks to its ``conviction buy'' list.

Shire, the U.K.'s third-biggest drugmaker, jumped 5.7 percent to 842.5 pence. Goldman upgraded the shares from ``neutral.''

Elan, Ireland's largest drug company, jumped 5.5 percent to 21.941 euros.

Drugmakers also gained as the dollar climbed against the pound and the euro, boosting the value of sales in the U.S. currency. Health-care companies have the highest percentage of dollar-based sales among Europe's 18 industry groups, according to Citigroup Inc.

Glaxo, AstraZeneca

GlaxoSmithKline Plc, Europe's biggest drugmaker, added 2.1 percent to 1,121.5 pence. The U.S. accounts for about 45 percent of its revenue. AstraZeneca Plc, the U.K. drugmaker that gets more than 50 percent of its sales from America, climbed 3.1 percent to 2,157 pence.

Banco Popular Espanol SA climbed 4.6 percent to 9.80 euros. Shareholder Trinitario Casanova agreed to sell 3.5 percent of the lender to Blueprime, on condition that the buyer amass a stake of at least 20 percent.

DSV A/S gained 1.5 percent to 121.5 kroner. The Nordic region's biggest trucking company agreed to buy ABX Logistics Worldwide SA from 3i Plc and partners for 750 million euros ($1.16 billion) to expand its air and sea freight-forwarding business in Europe.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.

Last Updated: June 23, 2008 12:38 EDT