June 27 (Bloomberg) -- European stocks fell, the Dow Jones Stoxx 600 Index posting its first back-to-back weekly declines since the start of the rebound in March, on concern the global economic recovery will falter.

Sanofi-Aventis SA slumped 16 percent, as health-care companies posted the second-biggest retreat among the 19 industry groups on the Stoxx 600, after a European study raised concern the Paris-based drugmaker’s Lantus diabetes treatment carries risks. Credit Agricole SA, France’s third-biggest bank, slid 13 percent as analysts downgraded the shares, citing risks to earnings. Man Group Plc dropped 7.8 percent after Morgan Stanley sold 12 million of the shares at a discount.

Europe’s Stoxx 600 fell 1.8 percent to 204.47 on the week. The World Bank predicted that the global recession will be deeper this year than it forecast in March, while European Central Bank council member Axel Weber said the bank has used up room to cut interest rates.

“We don’t think this is going to be anything other than a very anemic recovery,” Richard Cookson, the London-based head of global asset-allocation research at HSBC Holdings Plc, said on Bloomberg Television.

The World Bank forecast the global economy will contract 2.9 percent this year in a report June 22. That compares with a prior estimate of a 1.7 percent decline. In contrast, the Organization for Economic Cooperation and Development raised its growth forecast this week.

Bank of England

The Bank of England said June 26 that financial institutions’ losses from the crisis have left them vulnerable to another wave of shocks, including the risk that the economy will stay mired in recession.

Investors are returning to the options market to hedge against declines in equities amid signs the chance of “large” falls is increasing as the economic recovery falters, according to Morgan Stanley analysts.

National benchmarks slid in 13 of the 18 western European markets. The U.K.’s FTSE 100 dropped 2.4 percent and Germany DAX declined 1.3 percent. France’s CAX retreated 2.8 percent.

Sanofi dropped after Morgan Stanley’s Andrew Baum lowered the stock to “equal-weight” from “overweight,” and reduced his 12-to-18-month price forecast to 48 euros a share from 58 euros. Alexandra Hauber of JPMorgan Chase & Co. cut Sanofi to “neutral” from “overweight.”

Lantus Study

The Lantus diabetes drug was linked to an increased risk of cancer in studies in Germany and Sweden, according to the European Association for the Study of Diabetes, which issued an “urgent” call for further research.

Credit Agricole fell 13 percent. Analysts at Kepler Capital Markets and Cheuvreux cut their 2009 profit estimates for the French lender because of restructuring costs and losses at its Emporiki Bank of Greece SA unit. Credit Agricole spokeswoman Anne-Sophie Gentil said the bank hasn’t made any change to its profit outlook.

Man Group lost 7.8 percent. Morgan Stanley offered 12 million shares in Man Group Plc on behalf of an unidentified seller, according to details of the sale obtained by Bloomberg News. The shares were offered between 267 pence and 272 pence each, the terms showed.

Losses on the FTSE 100 index this week were limited by a rally in commodity shares as Xstrata Plc sought a merger with Anglo American Plc, which rallied 11 percent. Xstrata said June 24 that its “merger of equals,” which Anglo American has rejected, would be in the interests of both companies’ shareholders.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.

Last Updated: June 27, 2009 04:11 EDT