(Corrects date for biggest gain in fifth paragraph.)

Aug. 24 (Bloomberg) -- European stocks declined for the first time in six days, led by banks, before a report that may show new home sales in the U.S. sank to a seven-year low.

Deutsche Bank AG, Germany's biggest bank, Barclays Plc and Allianz SE led financial stocks lower. Aker Yards ASA tumbled the most in almost two months after earnings missed analysts' estimates.

The Dow Jones Stoxx 600 Index lost 0.3 percent to 368.21 at 1:02 p.m. in London. The Stoxx 50 slipped 0.3 percent, as did the Euro Stoxx 50, a measure for the euro region.

``I wouldn't be surprised if the situation in the U.S. housing market continued to worsen in the near term,'' said Edward Collins, a London-based fund manager at New Star Asset Management Group Plc, which manages about $41 billion. ``What worries me is the intraday volatility that we are seeing. I want to see that dry up before I get back into the market in a big way.''

The Stoxx 600 has climbed 2.4 percent this week, the biggest increase since the week ending June 15. U.S. stocks yesterday fell for the first time in six days and Treasuries advanced after the nation's largest mortgage lender said the economy is heading for a recession.

The dollar fell against the yen today and was poised for a weekly decline against the euro. U.S. Treasuries rose, with 10- year notes headed for a second weekly advance.

New home purchases fell to an annual rate of 820,000 last month from 834,000 in June, according to the median forecast of 73 economists surveyed by Bloomberg News. That would be the slowest pace of sales since June 2000. The Commerce Department report is expected at 10 a.m. in Washington.

National Markets

National benchmarks retreated in all of the 18 western European markets except Portugal and the U.K. Germany's DAX sank 0.5 percent. France's CAC 40 was little changed, and the U.K.'s FTSE 100 rose less than 1 percent.

Deutsche Bank lost 1.1 percent to 90.16 euros. Barclays, the third-biggest U.K. bank, dropped 1.8 percent to 616 pence. Allianz, Europe's largest insurer, fell 1.3 percent to 157.08 euros.

Aker Yards ASA fell 6 percent to 62.75 kroner. Europe's largest shipbuilder said second-quarter net income dropped 5.2 percent to 200 million kroner ($34.1 million), trailing the 231 million krone-average analyst estimate in an SME Direkt poll.

Palfinger AG, the world's biggest maker of truck-mounted cranes, lost 1.5 percent to 35.5 euros after Merrill Lynch cut its recommendation on the stock to ``neutral'' from ``buy,'' saying ``upgrades to 2007 estimates appear less likely.''

NCC AB added 4.8 percent to 176.5 kronor. Deutsche Bank lifted its share-price estimate for Sweden's second-largest construction company to 240 kronor from 237.

``Investor sentiment will improve after a poor share-price performance,'' Stockholm-based analyst Hans Derninger wrote in a report to clients. Second-quarter earnings were better than expected, and the company has an ``attractive dividend yield,'' he said.

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

Last Updated: August 24, 2007 08:51 EDT