European Stocks Fall; Banks Lead Losses, Cairn Advances

European stocks dropped, paring the benchmark Stoxx Europe 600 Index’s biggest two-day rally since February, as Spanish bond yields rose and U.S. factory orders rebounded less than economists had estimated.

Banca Popolare di Milano Scarl led a gauge of European banking shares lower. Ferrovial SA tumbled 6.4 percent as Spain’s government published its budget for 2012. Cairn Energy Plc gained 4 percent after agreeing to buy Agora Oil & Gas AS, which is owned by RIT Capital Partners Plc and Jacob Rothschild. Lonza Group AG advanced 1.6 percent after it named Richard Ridinger as chief executive officer.