Feb. 27 (Bloomberg) -- European stocks fell on mounting concern over earnings as HBOS Plc, the U.K.'s biggest mortgage lender, said corporate lending and profit margins are declining and Bouygues SA, the world's second-largest construction company, reported results that trailed analysts' estimates.

U.S. index futures dropped before Federal Reserve Chairman Ben S. Bernanke's testimony to the House Financial Services Committee. The MSCI Asia Pacific Index climbed to a six-week high, led by BHP Billiton Ltd. after oil surged to a record and metals prices increased.

Europe's Dow Jones Stoxx 600 Index retreated for the first time this week, decreasing 0.7 percent to 327.68 at 11:32 a.m. in London. Futures on the Standard & Poor's 500 Index slipped 0.2 percent, while Asia's regional index added 2.3 percent.

``More negative surprises from the banking industry can't be excluded,'' said Monika Rosen, who helps manage the equivalent of about $41 billion as head of research at BA-CA Asset Management in Vienna. ``Investors are keeping their powder dry before Bernanke starts to speak.''

The dollar's drop to a record low of $1.50 per euro also weighed on European shares, Rosen said. A stronger euro makes European exports more expensive for buyers in the region's biggest trading partner.

The U.S. currency slid on speculation Bernanke will indicate the Fed is prepared to keep lowering interest rates in his semi-annual testimony at 10 a.m. in Washington.

The Stoxx 600 has fallen 10 percent this year on concern the stronger euro, losses from subprime mortgages and a U.S. slowdown will damp profit growth. Analysts cut their estimates for Stoxx 600 members' 2008 earnings growth to 6.9 percent from 11 percent at the end of last year, Bloomberg data show.

National Markets

National indexes retreated in all 18 markets in western Europe except Italy, Norway and Sweden. Germany's DAX decreased 0.3 percent, and the U.K.'s FTSE 100 slipped 0.7 percent.

In Asia, Japan's Nikkei 225 Stock Average added 1.5 percent to a seven-week high. Benchmarks advanced in all other markets open for trading, with Hong Kong's Hang Seng Index posting the biggest gain of 3.2 percent.

HBOS dropped 8.5 percent to 645 pence, the biggest slump in more than five years. The lender said second-half profit fell 8.9 percent as the company wrote down the value of subprime mortgage-related investments.

``Current turmoil in global financial markets introduces considerable uncertainty into the plans of all financial institutions,'' HBOS said. ``We are planning on the assumptions that conditions will remain uncertain throughout 2008.''

Svenska Handelsbanken AB, Sweden's third-largest bank by market value, lost 6.9 percent to 176 kronor. Excluding the sale of its life insurance and pension unit SPP, profit fell 23 percent to 2.24 billion kronor, missing the 2.52 billion-kronor median estimate of seven analysts surveyed by Bloomberg.

Bouygues

Bouygues led builders lower, dropping 6.8 percent to 47.4 euros. Net income excluding asset sales increased to 265 million euros ($397 million), the Paris-based company said. Analysts surveyed by Bloomberg predicted 337 million euros, according to the average of seven estimates.

Grupo Ferrovial SA, the Spanish builder that spent $20 billion buying BAA Ltd., dropped 2 percent to 44.08 euros, trimming yesterday's 8.6 percent advance. BAA Chief Executive Officer Stephen Nelson will resign from the U.K. airport operator in April, said three people with knowledge of the plan. BAA spokesman Malcolm Robertson declined to comment.

Separately, Deutsche Bank AG slashed its share-price estimate on Ferrovial by 28 percent to 60 euros.

Holcim, Telekom Austria

Holcim Ltd. lost 2.2 percent to 108.8 francs. The world's second-biggest cement maker said fourth-quarter profit fell after it sold a South African unit and a slowdown in construction hurt earnings in North America.

Telekom Austria AG, the largest Austrian phone company, slumped 11 percent to 15.33 euros, the steepest drop in more than three years, as a sales growth forecast missed analysts' estimates.

Revenue will rise about 5 percent in 2008, the Vienna- based company said today, short of the average growth estimate of 5.9 percent in a survey of analysts by Bloomberg.

Amgen Inc., the world's biggest biotechnology company, retreated 60 cents to $47.22 in Germany. Johnson & Johnson, the largest health-products maker, slipped 49 cents to $63.23. A study published in this week's Journal of the American Medical Association found that Anemia drugs sold by the companies raise the risk of blood clots and death in cancer patients.

Henderson Group

Henderson Group Plc soared the most in more than four years, jumping 16 percent to 111.5 pence. The U.K. money manager spun off from AMP Ltd. said full-year profit more than doubled after it attracted more money into higher-fee investments such as hedge funds.

BHP, the world's largest mining company and Australia's biggest oil producer, rose 2.8 percent to A$39.85. Santos Ltd., Australia's No. 3 oil and gas explorer, jumped 7.5 percent to A$12.70, the most since March 1987.

Crude oil for April delivery rose as high as $102.08 a barrel in New York as the weakening dollar spurred investors to buy commodities priced in the U.S. currency. Copper rallied in Shanghai on expectations Chinese demand will absorb recent gains in global stockpiles.

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

Last Updated: February 27, 2008 06:43 EST