March 19 (Bloomberg) -- European stocks fell, led by technology and telecommunications companies, after Ericsson AB's handset unit said profit will decline and Deutsche Telekom AG predicted a slide in domestic earnings.

Ericsson, the world's biggest maker of wireless networks, dropped the most in four months, while Deutsche Telekom, Europe's largest phone company, tumbled as much as 13 percent.

The Dow Jones Stoxx 600 Index lost 0.5 percent to 299.16 at 2:17 p.m. in London. Asset writedowns and credit losses at financial firms worldwide have reached $195 billion and the U.S. economy has slipped closer to a recession, helping to drag the Stoxx 600 down 18 percent this year.

``Investors' confidence remains shaky and this is leading to periodic sharp sell-offs,'' said Richard Scott, who helps oversee about $2.4 billion at Iimia MitonOptimal Plc in Exeter, England.

UBS AG and Barclays Plc led a rally in financial shares as Morgan Stanley reported earnings that beat analysts' estimates and regulators approved Fannie Mae and Freddie Mac to buy more home loans, limited the drop in the Stoxx 600.

Ericsson declined 9.1 percent to 10.44 Swedish kronor. Sony Ericsson Mobile Communications Ltd., the smallest of the world's four main mobile-phone makers, said first-quarter earnings and revenue will fall on slower handset sales, higher research costs and a component shortage.

``The market is mistrusting the company, its management, and the stock,'' said Niklas Lund, a fund manager at Alandsbanken Asset Management in Helsinki, which oversees $1 billion. He does not hold any Ericsson shares.

Nokia Oyj, the world's biggest maker of mobile phones, slid 5 percent to 19.43 euros.

Deutsche Telekom

Deutsche Telekom fell 8.7 percent to 10.39 euros. The company said sales and earnings at its combined Internet and fixed-line unit in Germany will slide this year.

UBS, Europe's largest bank by assets, gained 3 percent to 425.25 Swiss francs. Barclays, the U.K.'s third-largest bank, climbed 4.9 percent to 432.75 pence.

Morgan Stanley, the second-biggest U.S. securities firm, said first-quarter net income dropped to $1.45 a share, from $2.51 a year earlier. The average estimate for the three-month period ended Feb. 29 was $1.01 a share, according to a Bloomberg survey of 17 analysts.

Earnings from Lehman Brothers Holdings Inc. and Goldman Sachs Group Inc. yesterday eased concern investment banks are collapsing, spurring a 3.3 percent rally in the MSCI World Index, the biggest gain since 2002.

Regulators cut the surplus capital requirement to 20 percent from 30 percent for Fannie Mae and Freddie Mac as they sought to help expand the mortgage companies' investments and revive the U.S. home-loan market.

Societe Generale

Societe Generale SA declined 6.7 percent to 62.71 euros. BNP Paribas SA said it's no longer considering a ``potential tie-up'' with its smaller rival, ending speculation about a merger that would create Europe's second-biggest lender.

Seat Pagine Gialle SpA tumbled 22 percent to 10.48 euro cents. Italy's largest publisher of telephone directories fell the most since it started trading in Milan in August 2003 after saying it won't pay a dividend and instead focus on reducing debt.

Mitchells & Butlers Plc lost 5.8 percent to 332 pence after Lehman Brothers said the owner of the All Bar One pub chain may be short of cash.

EasyJet Plc plunged 12 percent to 329.5 pence. Europe's second-biggest discount airline said full-year earnings may fall short of company forecasts as it struggles to pass increased fuel costs on to passengers.

To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net.

Last Updated: March 19, 2008 10:22 EDT