Aug. 21 (Bloomberg) -- European stocks fell for the third time this week as concern deepened banks will report more writedowns, while Holcim Ltd.'s profit forecast pushed building- materials shares lower.

HSBC Holdings Plc dropped 2.8 percent, and BNP Paribas SA lost 2.5 percent after Citigroup Inc. analysts predicted three U.S. banks will write down a combined $6.4 billion this quarter. Holcim sank for a third day as the world's second-biggest cement maker said profit won't meet its target. Ryanair Holdings Plc slipped 3.1 percent as oil climbed above $122 a barrel.

Europe's Dow Jones Stoxx 600 Index lost 0.8 percent to 278.55 at 4:39 p.m. in London, extending this year's decline to 24 percent. Financial firms have led stocks lower worldwide in 2008 on concern accelerating inflation and more than $500 billion in credit-related losses will stifle profit growth.

``We are not going to see the bottom for at least another six months,'' said Gary Dugan, London-based chief investment officer for Europe at Merrill Lynch Global Wealth Management. ``In terms of this drip feed of bad news, this will continue with banks.'' He spoke in a Bloomberg Television interview. Merrill manages $1.5 trillion worldwide.

Higher Prices

Rising commodity prices have kept central banks from cutting interest rates even as the economy slows.

European Central Bank Governing Council member Nout Wellink said higher prices are feeding into wages, Het Financieele Dagblad reported, citing an interview.

``There are still effects in the pipeline that push up prices and we see second-round effects appear,'' Wellink, who also heads the Dutch central bank, told the newspaper. ``The higher prices feed into wages. We are monitoring all developments.''

Oil rose today on speculation that rising tensions between the U.S. and Russia may disrupt the flow of oil, and as a weaker dollar bolstered the appeal of commodities.

HSBC, Europe's largest bank, slipped 2.8 percent to 804.25 pence. BNP Paribas, France's biggest bank, sank 2.5 percent to 56.96 euros.

Citigroup analyst Prashant Bhatia cut his third-quarter earnings estimates for Lehman, Goldman Sachs Group Inc. and Morgan Stanley, and estimated the three banks will write down a combined $6.4 billion for the period.

Abandoned Talks

Separately, the Financial Times said Korea Development Bank and China's Citic Securities Co. abandoned talks to buy a stake in Lehman this month.

Matthew Russell, a spokesman for Lehman in Hong Kong, declined to comment on the report, as did Sung Joo Yung, a spokesman at Seoul-based Korea Development Bank. Raymond Tang, a spokesman for Citic in Beijing, said he hadn't heard about the discussions.

The cost of protecting bank debt from default rose to a five-week high. Credit-default swaps on the Markit iTraxx Financial index of 25 banks and insurers jumped 2.5 basis points to 90, the highest since July 16, according to JPMorgan Chase & Co. prices.

Holcim declined 0.8 percent to 76.45 francs. Second-quarter profit dropped after U.S. construction slowed and transport and raw-material costs increased.

Missing Target

Operating profit for 2008 will match last year's results on a comparable basis, the company said. That compares with a long- term target of 5 percent annual growth.

Net income fell to 696 million Swiss francs ($634 million) in the quarter from 2.07 billion francs a year earlier, when the Zurich, Switzerland-based company booked a 1.1 billion-franc disposal gain. Earnings before interest and tax decreased to 1.23 billion francs. Analysts estimated 1.31 billion francs.

Cie. de Saint-Gobain SA, Europe's biggest supplier of building materials, fell 2.5 percent to 39.15 euros. Lafarge SA, the world's No. 1 cement company, sank 3 percent to 77.98 euros.

Ryanair, Europe's largest discount carrier, slipped 3.1 percent to 2.54 euros. Air France-KLM Group, the region's biggest airline, sank 3.8 percent to 15.61 euros. Bayerische Motoren Werke AG, the world's largest luxury-car maker, lost 3.4 percent to 27.73 euros.

Crude oil for October delivery rose as much as $7.06, or 6.1 percent, to $122.04 on the New York Mercantile Exchange.

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

Last Updated: August 21, 2008 11:43 EDT