June 30 (Bloomberg) -- European stocks fell for the first day in three. BP Plc led a decline among energy producers, this year's best-performing industry, after oil futures reached a two- week low in New York.

``We've had the run for the moment,'' said Michael Hughes, chief investment officer at Baring Asset Management in London, which oversees $36 billion. The record $60.95-a-barrel oil price reached on June 27 ``may be the peak.''

Industrial-goods companies such as Siemens AG declined after ABB Ltd., the world's biggest maker of power transformers, cut its full-year profit forecast. Nokia Oyj led technology stocks lower after Dresdner Kleinwort Wasserstein said the handset maker faces heightened competition.

The Dow Jones Stoxx 600 Index lost 0.3 percent to 275.92 as of 4:30 p.m. in London, with all but four of its 18 industry groups declining. The Stoxx 50 dropped 0.5 percent.

The Euro Stoxx 50, a measure for the 12 countries using the euro, added 0.1 percent. It was supported by phone shares as investors favored companies that pay higher-than-average dividends, and after Smith Barney recommended clients buy France Telecom SA stock.

Benchmarks bounced between gains and losses amid expectations that the Federal Reserve will raise interest rates in the world's biggest economy for the ninth time in a year and signal more increases. The decision is due after European markets close today.

Investors are ``generally cautious ahead of the Federal Reserve interest-rate decision,'' said Ian Murrell, a trader at Wills & Co. Stockbrokers in London. ``Anything other than a quarter-point hike will be a shocker. But the accompanying statement will be closely scrutinized.''

Fed Decision

All but one of 93 economists in a Bloomberg News survey expect the Fed to lift its target rate by a quarter-point to 3.25 percent. The central bank, which raised its benchmark by quarter- point increments at every one of its policy meetings since last June, reiterated in May its plan to make future increases at a ``measured'' pace.

BP, Europe's biggest oil company, slipped 0.9 percent to 582 pence. BG Group Plc, a U.K.-based natural-gas producer and shipper, dropped 0.9 percent to 460.75 pence.

Crude oil for August delivery traded as low as $56.77 a barrel on the New York Mercantile Exchange, the weakest since June 17. The futures have dropped as much as 6.9 percent from their record high.

The Stoxx 600 Oil & Gas Index is the best-performing industry group this year, surging 23 percent.

`A Surprise'

ABB tumbled 6.2 percent to 8.4 Swiss francs, the sharpest fall in the Stoxx 600. The Zurich-based company said second- quarter net income will drop from the previous period.

Profit before interest and tax expressed as percentage of sales in 2005 will be between 6.6 percent to 7.1 percent because of additional charges and higher raw material costs, the company said. ABB earlier forecast a margin of 7.7 percent.

``The profit warning was a bit of a surprise,'' said Plinio Zanetti, a fund manager at Bank Hofmann AG in Zurich, which oversees about $16 billion. ``When news like this comes out it has an impact.'' Bank Hofmann owns fewer ABB shares in their Swiss fund than are represented in benchmarks, Zanetti said.

Siemens, the world's second-largest maker of power- generation turbines, lost 0.9 percent to 60.34 euros. Sandvik AB, the biggest maker of metal-cutting tools, lost 1.6 percent to 290.5 Swedish kronor.

Nokia Downgrade

Nokia, the world's biggest mobile-phone maker, slid 1.8 percent to 13.85 euros. Dresdner cut its recommendation to ``sell'' from ``hold,'' citing increasing competition from companies such as Motorola Inc.

The Stoxx 600's index tracking technology stocks dropped 1.2 percent, the biggest fall among the measure's industry groups.

France Telecom, Europe's second-largest phone company, added 1.5 percent to 24.16 euros. Smith Barney, a unit of Citigroup Inc., upgraded the stock to ``buy'' from ``hold,'' citing reduced concern about revenue declines. The shares should be trading at 26.5 euros today, analysts including Terence Sinclair wrote.

The Stoxx 600 Telecom Index, which is this year's worst performer having lost 0.1 percent before today, rallied 0.4 percent. That extended 1.8 percent jump yesterday, which came after France Telecom said it will more than double its 2005 dividend.

``The telecoms sector is quite hot at the moment,'' said Rogier Rake, who manages the equivalent of $362 million as asset manager at IBS Vermogensbeheer in Amsterdam. ``They have a lot of cash flow and I think they don't know what to do with it, so they want to give it back to shareholders.''

Dividend Yields

The average dividend yield in the 24-member Stoxx 600 Telecom Index is 3.38 percent. That's more than the 3.14 percent yield on the German 10-year bund, the benchmark for Europe, and higher than Stoxx 600's average yield of 3.1 percent.

Deutsche Telekom, Europe's biggest phone company, increased 1.2 percent to 15.27 euros. BT Group Plc, the largest British phone company, rose 0.6 percent to 229.5 pence.

Adrian Darley, a fund manager at Gartmore Investment Management Ltd. in London, said he recently bought Deutsche Telekom shares. The company ``stands out in a market where we're not seeing a lot of opportunities across Europe,'' he said. Gartmore manages the equivalent of $85 billion.

RWE AG, Germany's largest electricity producer, increased 1.8 percent to 52.25 euros, leading gains on the Euro Stoxx 50. Dresdner Kleinwort Wasserstein raised its share-price estimate to 64 euros from 54 euros, saying higher power prices will lift earnings.

To contact the reporter on this story: Kotaro Miyata in London at kmiyata2@bloomberg.net.

Last Updated: June 30, 2005 11:45 EDT