Aug. 4 (Bloomberg) -- European stock indexes fell for a second day from three-year highs. Royal Bank of Scotland Group Plc and Anglo American Plc paced the drop after reporting earnings that missed analysts' estimates.

Oil producers including Total SA declined. The French company, whose shares reached a record yesterday, said second- quarter production and refinery output decreased.

The Dow Jones Stoxx 600 Index lost 0.5 percent to 285.68 at 12:46 p.m. in London. The Stoxx 50 fell 0.7 percent, as did the Euro Stoxx 50, a benchmark for the 12 countries using the euro.

``In general, earnings are not bad, but given recent gains, if a company misses a target the market is ready to punish the stock,'' said Alfonso Trevino, who helps manage about $185 million at Atlas Capital in Madrid. He said he recently cut his equity holdings, and will wait until September before considering buying stocks.

Today's worse-than-expected earnings cut the number of Stoxx 50 companies that have beaten estimates this quarter to 61 percent from 69 percent. The Stoxx 50 has increased 13 percent this year amid speculation that earnings will increase.

The Stoxx 600 reached its highest since May 2002 two days ago. The Stoxx 50 rose to the highest since June of that year.

Unilever, the maker of Dove soap and Lipton iced tea, limited today's decline. Its shares rose the most in more than two years after the company forecast sales may increase as much as 4 percent this year.

Indexes Drop

Indexes fell in all 18 Western European markets, except for Iceland and Luxembourg. Germany's DAX Index lost 0.7 percent, while the U.K.'s FTSE 100 Index declined 0.3 percent. France's CAC 40 Index slipped 0.8 percent.

Total, Europe's largest oil refiner, dropped 2.2 percent to 206.70 euros in Paris. BP Plc, Europe's biggest oil company, fell 0.5 percent to 640 pence after closing at its highest in almost five years yesterday.

Oil prices yesterday reached a record $62.50 a barrel before erasing gains after European stock markets closed. Crude-oil futures in New York were recently trading at $61.32.

Total today also reported that second-quarter profit climbed 33 percent, bolstered by higher crude prices and wider refining margins. The result met analysts' estimates.

Strikes and maintenance shutdowns hurt the French company's refinery output, curbing the company's ability to take advantage of surging profit margins.

Royal Bank, Societe Generale

Royal Bank of Scotland, the U.K.'s second-largest lender by assets, lost 3.9 percent to 1,636 pence. First-half profit gained 10 percent to 2.53 billion pounds ($4.5 billion), short of the 2.65 billion-pound median estimate of eight analysts surveyed by Bloomberg.

Societe Generale, the third-biggest French bank, fell 3.1 percent to 88.35 euros, even after the company said profit in the second quarter rose 18 percent. Corporate and investment banking earnings fell 2 percent.

Buhrmann NV, the world's largest distributor of office supplies, dropped 2.3 percent, to 9.10 euros. Second-quarter profit missed analysts' estimates.

Epcos AG, a German maker of electronic components, lost 7.1 percent to 11.20 euros after reporting a fiscal third-quarter loss on lower demand and tax payments.

DaimlerChrysler AG sank 2.1 percent to 40.49 euros. Germany's financial regulator, BaFin, has started an inquiry into possible insider trading in shares of the world's fifth-biggest carmaker. The stock surged a record 11 percent following the carmaker's July 28 announcement that Chief Executive Officer Juergen Schrempp will step down.

The automaker today said seven executives sold shares following Schrempp's decision.

Unilever Jumps

Unilever jumped 4.6 percent to 57.45 euros in Amsterdam. Sales will probably gain 2 to 4 percent this year, Chief Executive Patrick Cescau said in an interview today, in line with the company's target over the next five years. Second-quarter sales rose 1 percent, better than the median estimate of no change from 12 analysts surveyed by Bloomberg News.

The company also said second-quarter profit dropped 28 percent as it spent more to develop new products and wrote down the value of its SlimFast products.

Imperial Chemical Industries Plc surged 10 percent to 298.5 pence in London, pacing gaining stocks in the Stoxx 600. Clariant AG, the world's second-largest specialty chemical maker, advanced 5.2 percent to 19.25 Swiss francs.

Both chemical companies beat analysts' profit estimates as they cut costs.

Linde, Amvescap, GKN

Linde AG, Germany's largest maker of industrial gases, rose 1.8 percent to 60.39 euros after saying profit more than doubled in the second quarter, boosted by demand for gas and cost cuts. Linde is sticking to its target for higher earnings this year.

Amvescap Plc slumped 7.5 percent to 384.75 pence, the biggest loser on the Stoxx 600. Canada's CI Fund Management Inc. yesterday said after markets closed that it wouldn't pursue a hostile takeover of the owner of the Aim funds.

Shares of Amer Sports Oyj, the Finnish company that's buying the Salomon winter-sports business, tumbled 4.2 percent to 15.90 euros. The company reduced its profit forecast for this year because of stagnating demand for alpine skis and bindings.

GKN Plc, which makes panels for Airbus SAS planes and engine parts for Ford Motor Co. climbed 7.3 percent to 292.5 pence. First-half sales added 4.6 percent from a year earlier. Profit excluding some items rose 24 percent in the period.

Sandvik, the world's biggest maker of metal-cutting tools, added 3.3 percent to 332 kronor in Stockholm. Second-quarter earnings rose to 6.10 kronor a share, exceeding the 5.79 kronor average estimate in a SME Direkt survey of 10 analysts.

The Bank of England reduced its benchmark interest rate for the first time in more than two years today, lowering the repurchase rate by a quarter of a percentage point to 4.5 percent. Thirty-five of 40 economists in a July 29 survey predicted the move, which comes after the U.K. economy grew at the slowest annual pace since 1993 in the second quarter.

The European Central Bank kept its benchmark interest rate at 2 percent for a 26th month today. All economists surveyed by Bloomberg before the announcement expected the ECB to keep the refinancing rate at its six-decade low until at least March next year, as increasing signs of an economic recovery alleviate the need for lower borrowing costs.

To contact the reporter on this story: Margo Towie in Brussels at mtowie@bloomberg.net.

Last Updated: August 4, 2005 07:55 EDT