Eurostoxx 50: 2,497.83 (–47.06) Frankfurt DAX: 6,640.59 (–156.16) Paris CAC: 3,449.45 (–73.34):EUROPEAN STOCKS sank for a fourth day yesterday, extending an 11-month low, amid concern the US recovery is faltering and the world's largest economy may lose its top credit rating.

The benchmark Stoxx Europe 600 retreated 2 per cent in London, the biggest drop since March.

The gauge has declined 13 per cent from this year’s high in February as the yield on Italian and Spanish bonds surged to records amid speculation the debt crisis will not be contained.

“The market sentiment at the moment is on apocalypse level,” said Peter Buergler, a trader at Luzerner Kantonalbank in Lucerne, Switzerland. “With the budget cuts in the US, opinions are resurfacing that the US could possibly slide into a recession. The loss of its AAA rating would send the markets even more into a descent.”

Moodys said the outlook for the US debt grade was negative after President Barack Obama signed into law a plan to lift the nation’s borrowing limit and cut spending following months of wrangling between Democratic and Republican politicians.

Société Générale fell 9.2 per cent to €29.52, its biggest drop in two years, after second-quarter profit fell 31 per cent because of a writedown on Greek government debt.

Cairn Energy dropped 4.7 per cent to 336.30p after saying a well off Greenland would be plugged and abandoned as drilling failed to find oil or gas.

UPM-Kymmene Oyj slumped 9.2 per cent to €9.01, the biggest decline since January 2003, as Europe’s second-largest paper maker forecast second-half profit will be similar to that in the first half.

Lagardere lost 8.1 per cent to €23.55, its lowest price in over a year, as Goldman Sachs downgraded the French publisher.

Meda, Sweden’s second-largest health-care company, slid 7.6 per cent to 69.95 kroner, its biggest drop since November 2010.

Axel Springer, Europe’s largest newspaper publisher, surged 10 per cent to €31.85 after saying that first-half operating profit rose 11 per cent.

Rexam, the world’s biggest maker of drinks cans, bounced 4.4 per cent to 369.20p after first-half profit climbed 29 per cent on demand from Europe. – (Bloomberg)