European stocks dropped last week, resuming a sell-off that started last month, on concern loan delinquencies may weigh on growth in the world's largest economy.

Deutsche Bank AG, Germany's largest bank, and Axa SA, Europe's No. 2 insurer, led financial shares to their second-biggest drop this year. Natixis, France's fourth-biggest lender, tumbled the most in more than eight years after saying it has about 1.4 billion U.S. dollars at risk from loans made to US subprime mortgage lenders, according to Bloomberg News.

"The loan situation is a big risk," said Matthieu Giuliani, a fund manager at Palatine Asset Management in Paris. "We're afraid of a chain reaction. If the US consumer coughs, the world economy sneezes. We're cautious on stocks."

Giuliani recently sold shares of Lafarge SA, Siemens AG and Banco Santander Central Hispano SA.

Stocks dropped worldwide after a report showed on Tuesday US mortgage delinquencies rose to a four-year high. The Stoxx 600 is down 6.1 percent since February 27, when concern China's government may tighten control on investment and data indicating slowing growth in the United States sparked the biggest weekly drop since March 2003.

The Dow Jones Stoxx 600 Index lost 2.3 percent last week. The Stoxx 50 tumbled three percent, and the Euro Stoxx 50, a gauge for the 13 nations using the euro, retreated 2.6 percent.

Stocks recouped some losses after Lehman Brothers Holdings Inc said on Wednesday that bad home loans won't curtail earnings and Bear Stearns Cos said a day later that defaults among the riskiest borrowers won't hurt its business.