European Stocks Drop to Three-Week Low, Trimming May Gain

European stocks fell to a three-week low, paring a 12th straight month of gains, as investors awaited reports on American consumer confidence and business activity. U.S. index futures and Asian shares retreated.

Roche Holding AG slipped 1.4 percent, leading health-care shares lower, after its flu drug failed to show additional benefits when given in a larger dose. Salzgitter AG dropped 2.8 percent as Nomura Holdings Inc. downgraded the shares. PostNL NV climbed 8.6 percent after raising its profit forecast.

The Stoxx 600 slid 0.9 percent to 300.83 at 9:37 a.m. in London, the lowest level since May 6. The benchmark gauge is heading for a decline of 0.8 percent this week as investors weighed the likelihood of a paring in Federal Reserve monetary stimulus. It has still advanced 1.4 percent in May for longest streak of monthly gains since July 1997.

"It's the end of the month, so we are seeing huge bouts of volatility ahead of key U.S. economic data this afternoon," Ishaq Siddiqi, a market strategist at ETX Capital in London, wrote in e-mailed comments. "Appetite to book profits is running high before the month of June starts, as stock indices have performed respectably again in May."

Standard & Poor's 500 Index futures retreated 0.5 percent today, and the MSCI Asia Pacific Index fell 0.3 percent.

U.S. Economy

The Thomson Reuters/University of Michigan final index of U.S. consumer sentiment climbed in May to 83.7, the highest level since July 2007, according to the median projection of economists in a Bloomberg survey. That matches this month's preliminary reading and follows 76.4 in April. The report is due at 9:55 a.m. New York time.

A separate release at 9:45 a.m. New York time may show business activity in the U.S. stagnated in May. The MNI Chicago Report's business barometer rose to 50 in May, from 49 the previous month, economists forecast in a Bloomberg survey. A reading of 50 is the dividing line between expansion and contraction.

In China, a report tomorrow may show manufacturing stagnated in May. A Purchasing Managers' Index (CPMINDX) compiled by the National Bureau of Statistics and China Federation of Logistics and Purchasing fell to 50 from 50.6 in April, according to the median forecast of 30 economists in a Bloomberg survey.

"Chatter in the market that China's PMIs for May will come in weaker than expected tomorrow also weighs on European share markets this morning," Siddiqi, wrote. "Slowing growth in China will add to the gloom about stalling global growth."