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European stocks fell for a fifth day, erasing their gains for the year, as Goldman Sachs Group Inc. cut China's growth forecast amid concern banks in the world's second-largest economy face a cash crunch.
The Stoxx Europe 600 Index declined 1.7 percent to 275.66 at the close in London. The equity benchmark has entered a so-called correction, having slumped 11 percent since May 22, when Federal Reserve Chairman Ben S. Bernanke commented on the possibility of paring bond purchases.
China's stocks plunged the most since August 2009 -- and the CSI 300 Index (SHSZ300) extended its decline from a February high to more than 20 percent -- after the country's central bank signaled it will maintain efforts to curb speculative lending.
Separately, Goldman Sachs cut its estimate for China's economic growth this year to 7.4 percent from an earlier prediction of 7.8 percent, citing weaker economic indicators and tighter financial conditions.
While money-market rates in the country fell for a second day from a record, the overnight repurchase rate of 6.47 percent was still more than double this year's average of 3.09 percent, according to a fixing compiled by the National Interbank Funding Center.
In Germany, data showed that business confidence increased in June in line with economists' estimates. The Ifo institute's business climate index, based on a survey of 7,000 executives, rose to 105.9 this month from 105.7 in May.
National benchmark indexes fell in all of the 17 western European markets trading today, except Iceland. The U.K.'s FTSE 100 retreated 1.4 percent, while France's CAC 40 declined 1.7 percent. Germany's DAX dropped 1.2 percent. Greece was closed for Whit Monday holiday.
Erste tumbled 8.5 percent to 20.09 euros, its biggest drop since January 2012. Austria's biggest lender plans to increase its share capital by 660 million euros in the third quarter as it redeems participation capital of 1.76 billion euros. Erste also cut its earnings outlook, saying it expects its pre-provision operating profit to decline by 5 percent this year.
Kazakhmys, which owns 26 percent of ENRC, plunged 13 percent to 233.7 pence, its lowest price since February 2009. ENRC founders and the Kazakh government made an offer valuing the mining company at 3.04 billion pounds. They offered shareholders $2.65 in cash and 0.23 Kazakhmys shares for each ENRC share held.
A gauge of mining companies in the Stoxx 600 slumped to its lowest level since July 2009. Rio Tinto Group, the second-largest commodity producer, declined 3.4 percent to 2,582 pence and Anglo American Plc fell 4 percent to 1,297.5 pence.
Kabel Deutschland advanced 1.7 percent to 85.50 euros. Vodafone, the world's second-biggest wireless carrier, raised its bid for Kabel Deutschland to 87 euros a share from the initial 80 euros. The German cable company said its board plans to recommend the cash offer to its shareholders.
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