Dec. 22 (Bloomberg) -- European stocks fell for a fourth straight day, extending the Dow Jones Stoxx 600 Index’s worst year on record, as signs increased a deteriorating global economy is snuffing out earnings.

Daimler AG and Bayerische Motoren Werke AG sank more than 3 percent after Japan’s Toyota Motor Corp. forecast its first operating loss in 71 years on plunging North American and European car sales and a surging yen. Randstad Holding NV, the world’s second-largest staffing company, slid 3.5 percent as Manpower Inc. of the U.S. withdrew its fourth-quarter forecast.

The Stoxx 600 dropped 1.6 percent to 193.32. The measure has slumped 47 percent this year as credit-related losses and writedowns at financial firms worldwide topped $1 trillion and the U.S., Europe and Japan entered the first simultaneous recessions since World War II.

“The economic slowdown is being confirmed and it isn’t reassuring,” said Kilian de Kertanguy, a fund manager at Cholet-Dupont Gestion in Paris, which oversees about $2.3 billion. “Companies most touched by economic activity are suffering. The auto sector is the sword of Damocles for the stock market.”

Analysts have slashed their earnings forecasts, predicting a 16 percent drop in full-year profits at Stoxx 600 companies, compared with 11 percent growth estimated at the start of the year. Earnings in 2009 are expected to rise 0.1 percent, according to data compiled by Bloomberg.

National benchmark indexes fell in all the 18 western European markets today except Austria and Ireland. The U.K.’s FTSE 100 slipped 0.9 percent. France’s CAC 40 tumbled 2.3 percent, while Germany’s DAX lost 1.2 percent as Volkswagen AG retreated.

Stimulus Plans

China today cut interest rates for the fifth time in three months after trade growth collapsed because of recessions in the U.S., Europe and Japan.

President-elect Barack Obama is expanding his stimulus package with a goal of creating or saving 3 million jobs over two years, a transition aide said Dec. 20. That’s revised from 2.5 million jobs he previously announced.

The target came at the suggestion of Christina Romer, Obama’s pick to head the Council of Economic Advisers, the aide said, speaking on condition of anonymity. Romer said the short, medium and long-term economic forecasts have worsened since Obama outlined the plan Nov. 22, according to the aide.

Daimler, the world’s largest truckmaker, dropped 4.6 percent to 24.87 euros. BMW, the biggest maker of luxury cars, fell 3.9 percent to 21.05 euros. Volkswagen, Europe’s largest carmaker, slid 5.9 percent to 269.03 euros.

Toyota Forecast

Toyota, the world’s second-biggest carmaker, said its loss in the year ending March will likely total 150 billion yen ($1.7 billion), compared with a previous forecast for a 600 billion yen operating profit. Toyota cut its net income forecast 91 percent to 50 billion yen.

“Carmakers are in difficulty,” Clemence Bounaix, who helps oversee about $5.6 billion as fund manager at KBL Richelieu Gestion, told Bloomberg Television. “The situation remains tense. There’s a systemic effect on the stock market.”

President George W. Bush said last week that General Motors Corp., the largest U.S. automaker, and Chrysler LLC will get $13.4 billion in emergency government loans in exchange for substantially restructuring their businesses.

European industrial orders fell by the most on record in October as the global recession deepened, eroding demand for machinery and equipment. Orders in the 15-nation euro area plunged 15.1 percent from the year-earlier month, the most since the euro was introduced in 1999, the European Union statistics office in Luxembourg said today.

Temporary Workers

Randstad lost 3.5 percent to 14.10 euros. Adecco SA, the world’s largest supplier of temporary workers, slipped 3 percent to 35.8 Swiss francs. Manpower withdrew its forecast for the fourth quarter, citing continued declines in the global labor markets and changes in foreign currencies.

Bank shares in the Stoxx 600 have slumped 66 percent this year following the collapse of the U.S. subprime-mortgage market. That’s the worst performance among 19 industry groups.

Danske Bank A/S, the second-biggest Nordic bank, dropped 5.2 percent to 50 kroner. The Danish government will inject 100 billion kroner ($18.7 billion) into the banking system to help lenders overcome the credit crisis, Jyllands-Posten said, citing Finance Minister Lars Loekke Rasmussen.

Dexia SA, the world’s largest lender to local governments, tumbled 7.1 percent to 2.35 euros after Standard & Poor’s cut the credit ratings of its main banking units, citing the prospects for long-term funding.

Irish Banks

Allied Irish Banks Plc climbed 1.2 percent to 1.67 euros, snapping a nine-day losing streak. Ireland’s biggest bank by market value will receive 2 billion euros ($2.8 billion) from the government, the finance ministry in Dublin said.

Anglo Irish Bank Corp., the country’s third-largest lender by assets, will get 1.5 billion euros and the government will control shares with 75 percent of Anglo Irish’ voting rights, the finance ministry said. Bank of Ireland Plc, the biggest bank by assets, will receive 2 billion euros from the government.

Anglo Irish slipped 14 percent to 30 cents, while Bank of Ireland surged 32 percent to 89 cents.

Infineon Technologies AG, Europe’s second-largest chipmaker, rallied 6.1 percent to 70 cents. The company’s Qimonda AG unit will get a loan of 325 million euros from the German state of Saxony, Infineon and a Portuguese bank as part of a rescue package for the distressed German memory-chip maker.

Deutsche Bank AG analysts upgraded Infineon shares to “hold” from “sell.”

Continental Shares

Continental AG stock tendered to buyer Schaeffler Group rose 17 percent after European Union antitrust regulators approved the takeover of the region’s second-largest car-parts maker.

Shares of Continental that investors tendered to Schaeffler in its acquisition bid gained 10.20 euros to 70.20. The 12.7 billion-euro purchase won EU clearance after markets closed Dec. 19. The stock costs about 6 percent less than the 75 euros a share that Schaeffler offered.

Freely traded Continental shares fell 14 percent to 32.01 euros after Michelin, the world’s second-largest tiremaker, said it will cut back production at most plants, leading to 150 million euros in charges. Top-ranked tiremaker Bridgestone Corp. slashed its full-year profit forecast by 82 percent today, citing shrinking demand and the yen’s gains against the dollar.

Continental also was moved from Germany’s benchmark DAX Index to the MDAX Index of 50 medium-sized companies.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.

Last Updated: December 22, 2008 12:31 EST