Oct. 8 (Bloomberg) -- European stocks fell, sending the Dow Jones Stoxx 600 Index to its worst three-day retreat since October 1987, on concern a coordinated interest-rate cut by six central banks won't prevent a global recession.

Royal Ahold NV, the Dutch owner of the U.S. Stop & Shop chain, dropped 6.6 percent as American retailers including J.C. Penney Co. forecast profit below analysts' estimates. BHP Billiton Ltd., the world's biggest mining company, sank 11 percent and BP Plc lost 6.8 percent as metals and oil slumped. Barclays Plc declined 2.4 percent even after British banks got a 50 billion-pound ($87 billion) government lifeline and emergency loans from the central bank.

The Stoxx 600 dropped 6 percent to 226.22, bringing its three-day retreat to 13 percent. The European benchmark index pared early losses of as much as 7.8 percent after the Federal Reserve, European Central Bank, Bank of England, Bank of Canada and Sweden's Riksbank each reduced their benchmark rates by half a percentage point.

``Today's coordinated interest-rate cut will help address this problem, but more will be needed,'' said Tony Dolphin, director of strategy and economics at Henderson Global Investors in London, which manages about $125 billion. ``Confidence has been severely dented by recent events and the outlook for growth has deteriorated badly.''

The Stoxx 600 has tumbled 38 percent this year after the collapse of the U.S. subprime-mortgage market spurred a retreat from high-risk debt and saddled global financial companies with more than $590 billion of credit losses and asset writedowns. The gauge closed today at the lowest level since December 2003 as all 18 industry groups retreated.

Cutting Forecast

The International Monetary Fund raised its estimate of losses tied to U.S. loans and securitized assets to $1.4 trillion yesterday from $1.3 trillion two weeks ago. The lender cut its forecast for global growth next year to 3 percent from an April prediction of 3.7 percent, according to the draft of its latest World Economic Outlook.

The euro-area economy won't start expanding again until the first quarter, according to the Munich-based Ifo Institute.

National indexes fell more than 4 percent in all 18 western European markets except Iceland and Portugal. Germany's DAX slipped 5.9 percent. The U.K.'s FTSE 100 declined 5.2 percent, while France's CAC 40 sank 6.3 percent.

Ahold slumped 6.6 percent to 7.48 euros. Tesco Plc, the U.K.'s biggest supermarket company, lost 3.1 percent to 381.1 pence.

J.C. Penney, Kohl's Corp. and Nordstrom Inc. forecast third-quarter profit that may trail analysts' estimates after September sales fell because of consumer concerns that the Wall Street meltdown will cost them their jobs and savings.

Commodities Drop

BHP Billiton dropped 11 percent to 972.5 pence. Anglo American Plc, the world's fourth-largest diversified mining company, declined 8.7 percent to 1,420 pence.

Copper, the metal used in wires and pipes, declined 6 percent to $5,295 a metric ton on the London Metal Exchange. Aluminum, nickel, tin, zinc and platinum also retreated.

Crude oil for November delivery fell 3.9 percent to $86.59 a barrel in New York. It dropped as much as 4.5 percent earlier to $86.05, the lowest since Dec. 6, 2007.

BP, Europe's second-biggest oil company, slipped 6.8 percent to 417 pence. Royal Dutch Shell Plc, the region's largest, declined 5.8 percent to 18.80 euros.

Barclays, the U.K.'s second-biggest bank by market value, retreated 2.4 percent to 278.25 pence.

U.K. Prime Minister Gordon Brown's government will invest about 50 billion pounds ($87 billion) in an unprecedented step to prevent a collapse of the U.K. banking system.

Buying Shares

As part of the plan, the government will buy preference shares, and the Bank of England will make at least 200 billion pounds available for banks to borrow under the so-called special liquidity plan, the Treasury said in a statement. The government will also provide a guarantee of about 250 billion pounds to help refinance debt.

The Stoxx 600 was valued at 9.44 times the reported earnings of companies in the index today, the cheapest since Bloomberg began compiling the data in January 2002. The MSCI World was valued at 12.4 times profit yesterday, the cheapest since at least 1995, while the S&P 500 traded for 19 times earnings.

The Fed's decision today brought its benchmark rate to 1.5 percent. The ECB's main rate is now 3.75 percent; Canada's fell to 2.5 percent; the U.K.'s rate dropped to 4.5 percent; and Sweden's rate declined to 4.25 percent. China cut interest rates for the second time in three weeks, reducing the main rate to 6.93 percent.

``The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability,'' according to a joint statement by the central banks. ``Some easing of global monetary conditions is therefore warranted.''

To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.

Last Updated: October 8, 2008 12:29 EDT