London:  European stocks retreated for a third day this week as the euro area's budget deficit widened to more than double the European Union's 3 per cent limit in 2009, led by Greece and Ireland. US index futures also fell.

Nokia led declining shares as the world's biggest maker of mobile phones reported lower-than-estimated first-quarter profit. ABB lost 7.5 per cent after reporting profit that missed analysts' estimates as orders and revenue dropped.

Nestle led rising shares as the world's largest food company said first-quarter sales climbed faster than analysts had estimated.

The Stoxx Europe 600 Index fell 1 per cent to 265.57 as of 1.53pm in London. The gauge has climbed 4.6 per cent in 2010 as the European Union agreed a $61 billion (Dh223.9 billion) aid package to help Greece tackle its deficit. Futures on the Standard & Poor's 500 Index slipped 0.5 per cent to 1,194.1 yesterday.

"The market reacted strongly to budget deficit figures in the euro area that were a bit worse than expected," said Martin Huefner, chief economist at Assenagon in Munich, which has more than $4.7 billion in client assets. "I'm very much worried about the future. The market will deteriorate this year and the first improvement in budget deficits will not come before 2011."

National benchmark indexes fell in 17 of the 18 western European markets. Greece's ASE Index slid 3.1 per cent, while Ireland's ISEQ dropped 1.1 per cent.

The total budget shortfall for the 16-nation euro region widened to 6.3 per cent of gross domestic product last year, the biggest since the introduction of the euro in 1999, from 2 per cent in 2008, the EU's Luxembourg-based statistics office said yesterday. At 14.3 per cent of GDP, Ireland had the largest shortfall, while Greece's deficit was 13.6 per cent.

The European Union said Greece's budget deficit last year was worse than it previously forecast and could top 14 per cent of gross domestic product as "off-market swaps" cloud its estimates.

Nokia slumped 14 per cent to 9.66 euros, heading for the biggest loss since July. Net income rose to 349 million euros, or 9 cents a share, from 122 million euros, or 3 cents, a year earlier. Analysts had predicted profit of 409.6 million euros on sales of 9.78 billion euros.

ABB sank 7.5 per cent to 21.98 francs as net income fell 29 per cent to $464 million, the Zurich-based company said. Analysts surveyed by Bloomberg predicted profit of $508.9 million. Sales decreased 4 per cent to $6.93 billion while orders declined 12 per cent.

Credit Suisse slid 5.4 per cent to 51.25 francs as Switzerland's second-biggest bank said debt trading revenue rose to 2.66 billion francs in the first quarter, from 815 million francs reported in the previous three months. That missed analysts' estimates for 2.8 billion francs and was down 34 per cent from the record 4.02 billion francs recorded a year earlier.

The bank said net income was 2.06 billion Swiss francs, compared with 2.01 billion francs a year earlier. That beat the 1.99 billion-franc median estimate of 13 analysts surveyed by Bloomberg.

Nestle rose 2 per cent to 53.05 francs as organic revenue, based on sales excluding any growth from takeovers, acquisitions, or mergers, advanced 6.5 per cent, accelerating from 2009's 4.1 per cent pace, the company said.