Jan. 31 (Bloomberg) -- European phone stocks, this year's worst performers, declined. Executives quit at both Cable & Wireless Plc and France Telecom SA amid slowing earnings growth.

``Investors are showing their displeasure with the whole telecommunications sector,'' said Sailesh Bhundia, a fund manager at EFG Asset Management in London, which oversees $2.4 billion. The resignation at Cable & Wireless ``gives an excuse to further reduce holdings.'' Bhundia doesn't own Cable & Wireless stock.

BASF AG and Air Liquide SA led gains among chemical companies after oil prices slipped for the first day in four. Ericsson AB rose as fourth-quarter profit beat analysts' estimates and drugmaker Elan Corp. advanced after reporting losses narrowed.

A rally that has sent the Dow Jones Stoxx 600 Index to its best January in eight years stalled in the last two days. The index slipped less than 0.1 percent to 321.03 today, while the Stoxx 50 gained less than 0.1 percent. The Euro Stoxx 50, a benchmark for the 12 countries using the euro, added 0.4 percent.

Benchmarks were little changed today as Alan Greenspan holds his last meeting as chairman of the Federal Reserve. The Fed is expected to raise the key U.S. interest rate by a quarter percentage point to 4.5 percent, based on a Bloomberg News survey, which would mark the 14th straight increase.

National indexes dropped in 11 of the 18 western European markets. Germany's DAX gained 0.3 percent, and France's CAC 40 added 0.2 percent. The U.K.'s FTSE 100 lost 0.3 percent.

The Stoxx 600 has climbed 3.6 percent in the first month of the year, the most since 1998. Energy and mining stocks have paced the gain on expectations earnings will benefit from higher commodity prices.

Sales Slowdown

Phone stocks have weighed on the rally. France Telecom, Europe's second-largest phone company has tumbled 11 percent this month after saying earlier that 2005 sales rose less than forecast and predicting a slowdown would continue this year.

The Stoxx 600 Telecommunications Index dropped 1.2 percent today and is down 4.4 percent this month.

Cable & Wireless slid 11 percent to 102.25 pence today. The phone company said Chief Executive Officer Francesco Caio will step down at the end of this financial year and profit won't rise in its home market.

France Telecom dropped 1.9 percent 18.72 euros. The company named Gervais Pellissier as chief financial officer, replacing Michel Combes, who quit after he declined to take a new job within the company.

BASF, the world's largest chemicals maker, rose 2 percent to 64.86 euros. Air Liquide, the biggest maker of industrial gases, added 1.6 percent to 169.2 euros.

Fuel Costs

Fuel expenses account for as much as 60 percent of input costs for chemical makers, according to analysts at Credit Suisse.

Crude oil fell after OPEC agreed to keep output near a 26- year high as concern mounts that supplies from Iran may be reduced amid increasing demand. Crude oil for March delivery fell 50 cents to $67.85 barrel on the New York Mercantile Exchange.

Ericsson, the world's largest maker of wireless networks, gained 0.7 percent to 27.4 kronor after reporting fourth-quarter profit climbed 52 percent to 8.54 billion kronor ($1.1 billion) because of increased demand in the Americas. Analysts had expected profit of 7.15 billion kronor on sales of 43.89 billion kronor, based on the average of 39 analysts' estimates in an SME Direkt poll.

Elan, which plans to return the withdrawn Tysabri multiple sclerosis drug to the market this year, climbed 3.3 percent to 12.29 euros. Elan said its fourth-quarter loss narrowed, helped by the manufacturing business and injectable antibiotic Maxipime.

Elan's ``numbers for the business ex-Tysabri surprised on the upside,'' Ian Hunter, an analyst at Goodbody Stockbrokers, said in a note.

BHP, Rio Fall

Mining stocks declined as copper prices retreated from record highs on signs that more metal will be delivered into storage during the next several weeks, boosting supplies at a time when demand has outpaced mine output.

BHP Billiton, the world's biggest mining company, dropped 2 percent to 1,038.5 pence, while Rio Tinto Group, the third- biggest, declined 2.9 percent to 2,867 pence.

Svenska Cellulosa AB, Europe's biggest tissue maker, gained the most in the Stoxx 600, climbing 8.8 percent to 316.5 kronor. The company said fourth-quarter profit increased 11 percent to 1.18 billion kronor ($154 million), after the Swedish company cut jobs and closed factories. Analyst polled by SME Direkt were expecting net income of 1.07 billion kronor.

Ciba Specialty Chemicals AG fell 1.8 percent to 81.2 Swiss francs. The world's largest maker of colors for plastics said it made a loss in the fourth quarter of 476 million francs ($370.4 million) as it wrote down some of the value of the textile dyes business. Eleven analysts surveyed by Bloomberg News estimated a net income of 48 million francs.

Shares of Deutsche Lufthansa AG, Europe's second-largest airline, gained 2.1 percent to 13.05 euros. The stock was raised to ``buy'' from ``hold'' at Citigroup Inc. on optimism profit over the next three years will grow as the carrier sheds less- profitable divisions.

To contact the reporter on this story: Martin Boer in Amsterdam at mboer1@bloomberg.net

Last Updated: January 31, 2006 12:24 EST