Dec. 19 (Bloomberg) -- European stocks declined for a third straight day, led by commodity producers, on concern the deteriorating global economy will sap demand for metals and oil.

BP Plc, Europe’s second-largest oil company by market value, and Total SA sank more than 1.7 percent as crude slid. BHP Billiton Ltd., the world’s biggest mining company, retreated 1.8 percent on lower metals prices. UBS AG led banks lower as Standard & Poor’s cut ratings and changed outlooks for 12 U.S. and European financial institutions.

The Dow Jones Stoxx 600 Index slipped 0.5 percent to 196.43, extending this week’s drop to 0.9 percent. The gauge is down 46 percent in 2008 as credit losses and writedowns at the world’s largest banks surpassed $1 trillion and the U.S., Europe and Japan entered the first simultaneous recessions since World War II.

“You could see as we go into January further oil price weakness,” said Bob Parker, vice chairman of Credit Suisse Asset Management in London, which oversees about $600 billion. “First-quarter corporate earnings growth numbers are going to be bad. We could easily see global earnings growth down 30 to 40 percent,” he told Bloomberg Television.

Stocks pared some of their losses in afternoon trading as U.S. President George W. Bush’s rescue plan for carmakers assuaged concern that a collapse of the industry would threaten millions of American jobs.

‘Worrisome’

France’s economy, the second largest of the 15 countries sharing the euro, will contract by the most since 1974 this quarter and slip into a recession early next year, the national statistics office Insee forecast.

“It’s not far from the worst year in a century for stocks,” said Romain Boscher, a fund manager at Groupama Asset Management in Paris, which oversees about $17 billion in stocks. “Rather than only a stock market crisis, it’s an economic and a financial crisis too -- That’s what’s worrisome,” he told Bloomberg Television.

German producer prices dropped the most since records began in 1949 in November as the cost of oil declined and the global economic slowdown curbed demand. Producer prices fell 1.5 percent from October when they were unchanged, the Federal Statistics Office in Wiesbaden said.

BP slid 3.7 percent to 505 pence. Total, Europe’s third- largest oil company, retreated 1.7 percent to 39.58 euros.

Crude traded below $36 a barrel in New York as a deepening global recession saps demand, countering efforts by OPEC to boost prices. The contract for January delivery has fallen 24 percent this week, slumping 9.6 percent yesterday.

BHP, Rio

BHP slid 1.8 percent to 1,235 pence, while Rio Tinto Group, the world’s third-biggest mining company, sank 6.5 percent to 1,429 pence.

Nickel and copper forecasts for 2009 were slashed by Troika Dialog, a Moscow-based bank, citing an “extreme deceleration of global growth.”

UBS, Switzerland’s biggest bank, slid 3.7 percent to 14.11 Swiss francs. Royal Bank of Scotland Group Plc, 58 percent owned by the U.K. government after a bailout, fell 6.7 percent to 43.4 pence. Ratings for both banks were cut to A+ from AA- by S&P.

“The downgrades and revised outlooks reflect our view of the significant pressure on large complex financial institutions’ future performance due to increasing bank industry risk and the deepening global economic slowdown,” S&P said in a statement.

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

Last Updated: December 19, 2008 12:48 EST