July 22 (Bloomberg) -- European stocks fell for the first time in five days, led by telephone and technology companies, after Vodafone Group Plc reduced revenue forecasts and Ericsson AB posted lower profits.

Vodafone, the world's largest mobile-phone company, tumbled 13 percent after the economic slowdown hurt sales prospects. Ericsson sank the most in eight months, while STMicroelectronics NV slipped as Texas Instruments Inc.'s profit forecast missed estimates. Banks retreated, sending benchmark indexes to their lows of the day, after Wachovia Corp. of the U.S. posted a record loss and cut its dividend.

``What we are seeing today is the product of the global economy rolling over and the second-round effects from the credit crunch'' on earnings, said Kevin Lilley, a London-based fund manager at Royal London Asset Management which oversees about $63 billion. ``We are now seeing the impact that has had on consumer and business spending.''

Europe's Dow Jones Stoxx 600 Index lost 1 percent to 279.54 at 3:55 p.m. in London, as 13 out of the 18 industry groups fell. About $13 trillion has been wiped off the value of global equities since October as financial companies notched up more than $452 billion in credit-related losses.

Analysts estimate earnings for companies in the Stoxx 600 will drop 2.4 percent in 2008, Bloomberg data show. That's down from 11 percent growth predicted at the start of the year.

The Stoxx 600 pared a decline of as much as 2.2 percent after crude oil dropped on forecasts that a tropical storm in the Gulf of Mexico will miss oil fields and refineries.

National Markets

National benchmark indexes retreated in all 18 western European markets except Switzerland. The U.K.'s FTSE 100 lost 1.2 percent. France's CAC 40 slid 0.4 percent, and Germany's DAX slipped 0.2 percent.

Vodafone dropped 13 percent to 129.55 pence. The company scaled back its sales forecast after slowing economic growth hurt revenue from phone calls. Full-year sales are now predicted to be ``around the bottom'' of the targeted 39.8 billion pounds ($79.7 billion) to 40.7 billion pounds outlook range.''

Telefonica SA, Europe's second-largest telephone company, tumbled 6.7 percent to 16.13 euros.

``The economic slowdown is starting to happen,'' said Andy Lynch, a London-based fund manager at Schroder Investment Management, which has about $10 billion. ``Now we've got a really big problem. We're not just talking about it. We're seeing it in the numbers'' in Vodafone.

Ericsson, the world's biggest maker of wireless networks, sank 10 percent to 67.3 kronor. Second-quarter profit fell 70 percent to 1.9 billion kronor ($320 million). Analysts surveyed by Bloomberg had estimated profit of 2.82 billion kronor and revenue of 48.1 billion kronor.

STMicroelectronics

STMicroelectronics fell 5.7 percent to 6.80 euros. Infineon, Europe's second-biggest maker of semiconductors, retreated 7.8 percent to 4.82 euros.

Texas Instruments, the second-largest U.S. semiconductor maker, said third-quarter profit will be as little as 41 cents a share on sales of at least $3.26 billion. Analysts in a Bloomberg survey had estimated earnings of 51 cents a share on sales of $3.56 billion.

Banks retreated after Wachovia reported a record quarterly loss of $8.9 billion and cut its dividend by 87 percent. American Express Co., the biggest U.S. credit-card company by purchases, said yesterday second-quarter profit declined 37 percent on worse-than-expected consumer defaults.

Barclays, Dexia

Barclays Plc, the U.K.'s third-biggest bank, dropped 4.8 percent to 308.50 pence. Credit Agricole SA, France's third- largest bank by market value, retreated 4.3 percent to 13.50 euros.

Dexia SA, the world's largest lender to local governments, plunged 13 percent to 8.27 euros, the steepest decline since at least 1996. Moody's Investors Service said the company's U.S. bond-insurance unit may lose its top credit rating.

Analysts have cut profit estimates for banks, the region's worst-performing stocks this year, as financial firms worldwide have raised more than $333 billion to offset losses stemming from the financial-market turmoil and slowdown in lending.

Financial companies in the Stoxx 600 will probably report profit declined 22 percent this year, the biggest drop among the region's 18 industries, according to analyst estimates compiled by Bloomberg News.

TomTom NV rallied 11 percent to 17.75 euros after Europe's largest maker of car-navigation devices reported second-quarter profit that beat analysts' estimates.

Paragon Group Cos. surged 26 percent to 105.75 pence, the steepest gain since January. The U.K. mortgage lender that stopped making new loans this year said it is in discussions with Blackstone Group LP about a possible takeover, the Financial Times reported yesterday, citing people familiar with the matter.

Blackstone spokesman Peter Rose couldn't be reached for comment. A Paragon spokesman declined to discuss Blackstone, manager of the world's biggest buyout fund.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.

Last Updated: July 22, 2008 11:04 EDT