The European markets fell for the first time in seven days on Friday after Air France-KLM forecast an annual loss and Royal Philips Electronics warned sales will decline this year.

A report from the Office for National Statistics showed today that the British economy shrank 1.6% sequentially in the fourth quarter, revised down from a contraction of 1.5%. In the third quarter, GDP was down 0.7%. Two consecutive quarters of decline in GDP denotes a recession.

Crude for May delivery fell $2.31 to $52.05 a barrel on the New York Mercantile Exchange, by the time the European markets closed, as investors digested a week's worth of grim economic news and sold off with the price of crude still close to the peak for 2009.

The FTSEurofirst 300 index of pan-European blue chips closed 1.06% lower at 737.46 points, while the narrower DJ Stoxx 50 index fell 1.12% to 1,822.99 points.

Around Europe, the U.K.'s FTSE 100 index fell 0.67% to 3,898.85, while France's CAC 40 index 1.78% to 2,840.62 and Germany's DAX index slipped 1.31% to 4,203.55.

Air France-KLM, Europe's largest airline, dropped 7.8% after the company said it will post a loss for the year ending March 31 and that it's unlikely to report a profit in the following 12 months.

Philips, Europe's largest consumer electronics maker, fell 1.5% after the company said it expects sales to decline this year.

Cap Gemini, Europe's biggest computer services company, slipped 7.7% after Accenture, the world's second biggest technology consulting firm, lowered its revenue and earnings forecast for the fiscal year 2009.

Mining stocks fell after metals prices retreated. BHP Billiton, the world's biggest miner, slid 3.4%, while Anglo American, the second biggest, dropped 4.6% and Kazakhmys, Kazakhstan's biggest copper producer, dipped 4.6%.

Similarly, heavily weighted oil stocks edged lower after crude oil prices declined. BP, Europe's biggest oil company, fell 0.4%, while Royal/Dutch Shell, slipped 0.7% and Total, the third biggest, dropped 1.2%.

Vodafone, the world's biggest mobile phone company, fell 3.1% after Bank of America cut its price target on the stock to 160 pence from 210 pence.

On the other hand, Barclays, Britain's third largest bank, jumped 24.1%, as the company said it does not need to raise any fresh capital after Britain's financial regulator subjected it to a detailed stress test and was satisfied the bank's balance sheet can withstand more pain.

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