July 25 (Bloomberg) -- European stocks declined for a second day after a drop in U.S. home sales and disappointing reports from Volvo AB and Randstad Holding NV triggered concern economic and profit growth will slow.

Volvo, the world's second-largest truckmaker, slid the most since 1998 after posting earnings that missed analysts' estimates. Randstad tumbled 16 percent after the world's third-largest staffing company said it's ``cautious'' for the third quarter. Hermes International SCA fell after saying annual profit will stagnate.

Earnings growth ``is going to be challenging,'' said Michael Hughes, who helps oversee $38 billion as chief investment officer at Baring Asset Management in London.

Europe's Dow Jones Stoxx 600 Index slid 0.9 percent to 385.50 as 15 of the 18 industry groups declined. The Stoxx 50 lost 0.9 percent and the Euro Stoxx 50, a measure for the euro region, sank 1.2 percent.

National benchmarks dropped in all of the 18 western European markets except Portugal, Greece and Spain. The U.K.'s FTSE 100 fell 0.7 percent. France's CAC 40 declined 1.2 percent and Germany's DAX dropped 1.5 percent.

Indexes extended declines after a report showed sales of existing homes fell in the U.S. for a fourth straight month in June, a sign housing remained mired in the worst slump in 16 years going into the second half.

``The weakness in the U.S. housing market will continue to weigh on the economy into 2008,'' said Jane Coffey, head of equities at Royal London Asset Management, which oversees about $14 billion.

`Rather Disappointing'

Volvo sank 9.1 percent to 129.75 kronor, the biggest decline since October 1998. Net income dropped to 4 billion kronor ($600 million) from 4.67 billion kronor a year earlier, the company said. That lagged behind the 4.48 billion-krona median estimate of eight analysts surveyed by Bloomberg News.

Randstad lost 16 percent to 52 euros, the biggest drop since November 2000. The world's third-largest staffing company today forecast earnings per share of at least 95 cents. Analysts had expected about 1.10 euros, said Eureffect Asset Management fund manager Gert-Jan Geels today.

``Randstad's outlook is rather disappointing,'' said Marc Zwartsenburg, an analyst at ING Wholesale Banking who has a ``buy'' rating on the stock.

Adecco SA, the world's biggest temporary employment agency, sank 5.5 percent to 88.4 Swiss francs. Hays Plc, Britain's largest recruitment company, retreated 4.1 percent to 168.75 pence. Michael Page International Plc, the U.K.'s No. 2 recruiting company, dropped 5.2 percent to 543 pence.

Hermes, STMicroelectronics

Hermes declined 3.6 percent to 75.32 euros. The maker of Kelly and Birkin handbags said full-year revenue will gain between 8 percent and 8.5 percent. The company had forecast an increase of 8 percent to 10 percent.

STMicroelectronics NV declined 6.4 percent to 12.83 euros. Europe's largest semiconductor maker said yesterday sales fell 3.1 percent to $2.42 billion in the second quarter, hurt by a glut of chips and increased competition.

Rio Tinto Group, the world's third-biggest mining company, dropped 3.7 percent to 3590 pence. Anglo American Plc, the second-largest mining company, retreated 3 percent to 3040 pence.

Copper fell on speculation a slump in homebuilding will damp demand in the U.S., the world's second-largest consumer of the metal. The metal for September delivery dropped 2.4 percent to $353.3 a pound on the Comex division of the New York Mercantile Exchange.

Siemens, Glaxo

Siemens AG retreated the most in more than four years after Europe's largest engineering company agreed to buy Dade Behring Holdings Inc., a U.S. medical-scanners maker, for $7 billion. The shares slumped 6 percent to 99.7 euros.

GlaxoSmithKline Plc, Europe's largest pharmaceutical company, climbed 2.3 percent to 1275 pence. The U.K. drugmaker reported an unexpected increase in second-quarter profit as demand rose for asthma treatment Advair.

Shares of Fresenius Medical Care AG, the world's biggest provider of kidney dialysis, rose 5 percent to 35.15 euros. U.S. lawmakers are debating a proposal that would extend coverage of dialysis patients by Medicare, the government health plan for the elderly, JPMorgan Chase & Co. analysts wrote today in a note. Patients would have Medicare as a secondary payer for 42 months, up from the current 30 months, according to JPMorgan.

Fresenius is also benefiting from a decision by the U.S. not to cut funding for Epogen, an Amgen Inc. anemia drug that Fresenius sells to its dialysis patients.

Daimler, Atos Origin

DaimlerChrysler AG, the world's second-largest maker of luxury cars, climbed 1.8 percent to 66.93 euros. Earnings before interest and tax at Mercedes increased to 1.2 billion euros ($1.65 billion) in the second quarter from 690 million euros a year earlier, the company said. Analysts surveyed by Bloomberg News expected profit of 1.02 billion euros.

Atos Origin SA, France's second-largest computer services company, fell 2.2 percent to 47.06 euros. Deutsche Bank lowered its recommendation on the shares to ``sell' from ``hold.''

Shares of GPC Biotech AG plunged 33 percent to 9.82 euros after a U.S. panel recommended delaying a decision on its experimental prostate cancer drug by at least a year.

CSR Plc, the U.K. maker of microchips used in Nokia Oyj mobile phones, tumbled 11 percent to 770.5 pence after the company's third-quarter sales forecast missed some analysts' estimates.

To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net; Jakob Lindstroem in Stockholm at jlindstroem@bloomberg.net

Last Updated: July 25, 2007 12:31 EDT