July 5 (Bloomberg) -- European stocks fell for a fifth week, completing the longest losing streak since January, as concern deepened that record oil prices and slowing economic growth will hurt profits.

ArcelorMittal, the world's largest steelmaker, and Lonmin Plc paced a retreat in basic-resources companies, sending a measure for the industry to its worst week in more than two months. TUI Travel Plc, Europe's largest tour operator, and Iberia Lineas Aereas de Espana SA slipped as oil rose above $145 a barrel for the first time. Marks & Spencer Group Plc, suffering from a slump in U.K. consumer spending, led retail stocks lower after reporting the steepest sales decline since 2005.

Europe's Dow Jones Stoxx 600 Index sank 2.7 percent to 279.53. Stocks have retreated worldwide this year, erasing almost $11 trillion from global equity markets, on concern credit- related losses topping $400 billion, record oil and accelerating inflation will force central banks to raise borrowing costs.

``Inflation continues to weigh on markets, clouding the outlook for earnings and economic growth,'' said Christoph Berger, who helps oversee almost $100 billion as a fund manager at Cominvest Asset Management in Frankfurt. ``Economic headwinds bear risks for the market.''

European Central Bank President Jean-Claude Trichet played down prospects of higher interest rates, saying the quarter-point rise to 4.25 percent on July 3 will help bring inflation back below 2 percent. Trichet said he has ``no bias'' on further moves.

Crude Oil

Crude oil climbed to a record above $145 a barrel in New York on July 3. Prices have risen 2.8 percent this week and more than doubled in the past year.

National benchmarks declined in all 18 western European markets. Germany's DAX Index fell 2.3 percent, and France's CAC 40 retreated 3 percent. The U.K.'s FTSE 100 decreased 2.1 percent. The Stoxx 50 slipped 1.3 percent, and the Euro Stoxx 50, a measure for the euro region, lost 2 percent.

In the U.S., the Dow Jones Industrial Average dipped into a bear market on July 2 and the U.K.'s FTSE 100 Index briefly entered a bear market a day later.

Earnings for companies in the Stoxx 600 are expected to drop 2 percent this year, compared with 11 percent growth forecast at the end of last year, according to data compiled by Bloomberg.

``There has been a shift in the market's focus away from the credit crunch in March, towards oil and inflation,'' Bernd Meyer, head of pan-European equity strategy at Deutsche Bank AG in London, said in a Bloomberg Television interview.

ArcelorMittal

ArcelorMittal fell 16 percent and Lonmin, the world's third- biggest platinum producer, retreated 15 percent. The Stoxx Basic Resource Index sank 8.5 percent, the steepest drop since the week ended March 21 and the worst performance among 18 industry groups.

ArcelorMittal said July 1 that about half its U.S. customers refused to pay a $250-a-ton surcharge that was added in May to make up for soaring raw-material costs.

Eramet SA, operator of the world's largest ferronickel plant, plunged 19 percent. Challenges magazine reported July 3 the Duval family, its main shareholder, has been selling shares.

TUI Travel sank 13 percent and Iberia, Spain's largest airline, tumbled 22 percent. Thomas Cook Group Plc, Europe's second-biggest travel company, fell 11 percent, and Air France- KLM Group, the largest European airline, slipped 8.3 percent.

Jet-fuel prices in northwest Europe increased 5.3 percent this week, bringing the advance in 2008 to 59 percent, Bloomberg data show.

Marks & Spencer

Marks & Spencer fell 32 percent this week. Sales at U.K. outlets open at least a year slid 5.3 percent in the 13 weeks ended June 28. A 4.5 percent decline in same-store sales of food was the biggest drop since at least 1998. Marks & Spencer lost market share in food after Tesco Plc and Wal-Mart Stores Inc.'s Asda reduced prices, in what Executive Chairman Stuart Rose said was ``the biggest price war we've probably had in the last 20 years.'' Conditions won't improve for two years, he said.

Kingfisher Plc, Europe's largest home-improvement retailer, slipped 13 percent. Next Plc, the third-biggest U.K. fashion retailer, decreased 10 percent.

Construction and material stocks were the second-biggest decliners in the Stoxx 600, with a measure for the industry retreating 7.1 percent.

CRH Plc dropped 6.9 percent. The world's second-biggest maker and distributor of building materials said July 2 first- half profit fell 10 percent on a weaker dollar and deteriorating markets in North America and Europe. CRH also said it will fail to post a 16th consecutive year of profit growth in 2008.

Taylor Wimpey

Analysts at Credit Suisse Group AG on July 1 cut their price estimates on stocks including CRH, Lafarge SA and Cie. de Saint-Gobain SA and advised clients not to invest in European building-materials companies for at least the next year.

Taylor Wimpey Plc slumped 49 percent, the worst-performing company in the Stoxx 600. The U.K.'s largest homebuilder failed to raise funds from investors, scrapped its first-half dividend and said Finance Director Peter Johnson resigned.

France Telecom SA, Europe's third-biggest telephone company, advanced 14 percent, while Vodafone Group Plc, the world's largest mobile-phone company, gained 7.3 percent.

Morgan Stanley upgraded European telecommunication shares to ``attractive'' from ``inline'' on July 2. A measure for the industry in the Stoxx 600 was one of only two groups to rise this week, climbing 4.8 percent.

``Defensive stocks are interesting because their performance isn't linked to economic growth,'' said Benoit de Broissia, an analyst at Richelieu Finance in Paris, which oversees $6.2 billion. ``They offer good visibility on sales. They are safe havens when the economic context is difficult.''

To contact the reporter on this story: Henrietta Rumberger in Frankfurt at hrumberger@bloomberg.net.

Last Updated: July 5, 2008 02:56 EDT