June 12 (Bloomberg) -- European stocks declined after HBOS Plc said its share of the U.K. mortgage-lending market fell and Texas Instruments Inc. said sales will miss its highest estimates.

HBOS, Britain's biggest mortgage bank, had its steepest drop in almost three months. Technology stocks retreated the most since March, led by Nokia Oyj, the world's biggest mobile-phone maker, and STMicroelectronics NV, Europe's largest maker of semiconductors.

``The quality of earnings is coming back in focus,'' said Boris Boehm, a fund manager at Nordinvest in Hamburg, which has $7 billion.

Stocks tumbled the most in three months last week after the European Central Bank raised its benchmark interest rate. Yields on U.S. 10-year Treasury notes, which touched the highest in five years last week, rose today.

``There's concern the correction might not be over yet,'' said Philipp Musil, who helps oversee $24 billion at Vienna-based Constantia Privatbank AG.

The Dow Jones Stoxx 600 Index fell 0.5 percent to 386.81 in London. The Stoxx 50 lost 0.6 percent and the Euro Stoxx 50, a measure for the 13 nations sharing the euro, dropped 0.7 percent.

National benchmarks decreased in all 18 western European markets except Portugal. Germany's DAX fell 0.4 percent. France's CAC 40 slid 0.7 percent, as did the U.K.'s FTSE 100.

A report today showed so-called core U.K. inflation, which excludes food, alcohol, energy and tobacco, accelerated to match the highest level since 1997. Investors are betting the Bank of England will raise its key rate from the current six-year high before the fourth quarter.

HBOS, Nokia

HBOS sank 3.6 percent to 1,031 pence, the biggest decline since March 14. HBOS's share of U.K. mortgages is likely to decline to about 8 percent in the first half from 21 percent in 2006, the company said.

Royal Bank of Scotland Group Plc, which is leading a possible takeover of ABN Amro Holding NV, dropped 2.7 percent to 642 pence. Royal Bank is the U.K.'s second-biggest bank by market value.

Texas Instruments, the world's biggest maker of mobile-phone chips, said yesterday second-quarter sales will be $3.36 billion to $3.51 billion. That compares with an April estimate of $3.32 billion to $3.6 billion. Profit will be 40 cents to 44 cents a share, compared with an earlier forecast of 39 cents to 45 cents.

Nokia, the biggest customer of Texas Instruments, slid 1.8 percent to 20.78 euros. STMicroelectronics declined 1.4 percent to 14.03 euros. ARM Holdings Plc, a designer of chips used in mobile phones, lost 1.5 percent to 134.5 pence. Technology shares on the Stoxx 600 sank 1.6 percent, the most since March 14.

ICI Gains

Imperial Chemical Industries Plc, the U.K.'s largest maker of specialty chemicals, rose 1.1 percent to 523.75 pence. Merrill Lynch & Co. said the company could be targeted by Akzo Nobel NV, the world's largest maker of paints and coatings. Analysts said the Dutch company is in a position to ``comfortably'' buy any of its rivals.

TeliaSonera AB rose 3.1 percent to 51.25 kronor after the Nordic region's largest telephone company ousted Chief Executive Officer Anders Igel. The company said it will seek a successor who can ``improve the spirit and commercial drive'' and that Chief Financial Officer Kim Ignatius will take charge as acting president and CEO.

Voestalpine, E.ON

Voestalpine AG, the Austrian steelmaker taking over Boehler- Uddeholm AG, jumped 2.7 percent to 57.60 euros. Credit Suisse Group raised its price estimate for the stock 23 percent to 65 euros a share.

Clariant AG dropped 3 percent to 19.75 Swiss francs. Morgan Stanley is selling shares worth as much as 70.5 million Swiss francs ($57 million) in the world's second-largest specialty chemicals company.

Sebastian Howell, a London-based spokesman for Morgan Stanley, was not immediately available to comment.

E.ON AG dropped 1.4 percent to 114.47 euros after Europe's largest utility had its credit rating cut two steps by Standard & Poor's on concern the company's strategy of focusing on growth and shareholder value may hurt bondholders.

Siemens AG added 1.1 percent to 97.43 euros. Morgan Stanley raised its price estimate for shares of the region's largest engineering company 18 percent to 130 euros in a report today.

``Siemens' new management will continue to streamline the group and focus exclusively on three key application fields: infrastructure, energy and health-care,'' analysts including Ben Uglow wrote. ``There are 20 billion euros of additional disposals that could be made.''

Dexia SA, Belgium's third-biggest financial-services company, advanced 2.3 percent to 23.69 euros on speculation Societe Generale SA, France's third-largest bank, may try to acquire it. Societe Generale shares fell 2.2 percent to 139.57 euros.

``There is a rumor in the market of a possible interest of Societe Generale for Dexia,'' said Christophe Ricetti, an analyst at Ixis Securities in Paris, who has an ``add'' recommendation on the shares of both companies. ``There are a lot of rumors on Societe Generale right now. I don't know if this is more credible than the others.''

Helene Agabriel, a spokeswoman for Societe Generale in Paris, and Ulrike Pommee, a spokeswoman for Dexia in Brussels, declined to comment.

To contact the reporter on this story: Andreas Hippin in Frankfurt at ahippin@bloomberg.net.

Last Updated: June 12, 2007 12:00 EDT