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By Bloomberg

European stocks retreated for a second day as Tesco Plc tumbled, and falling oil prices dragged energy companies lower.

The Stoxx Europe 600 Index slid 1.2 percent to 344.57 at 8:40 a.m. in London, heading for its biggest two-day decline in seven weeks. A plunge in construction and energy companies dragged European stocks down yesterday after a four-week rally. Standard & Poor’s 500 Index futures fell 0.4 percent today.

“There is a growing feeling that if the price of oil goes down further, there is a risk of a further slowdown in the economy,” Ion-Marc Valahu, a co-founder and fund manager at Clairinvest in Geneva, said in a phone interview. “Equity markets are driven this morning on the back of a Chinese sell- off and oil prices not being able to find a bottom.”

China said lower-rated bonds can no longer be used as collateral for some short-term loans, sparking a selloff in riskier debt that spread to government notes and stocks. The Shanghai Stock Exchange Composite Index slid 5.4 percent, the most since August 2009. Energy companies led the MSCI Asia Pacific Index 0.7 percent lower.

German imports slid 3.1 percent in October from a month earlier, data from the Federal Statistics Office showed. Analysts had estimated a drop of 1.7 percent. Exports fell 0.5 percent, compared with forecasts for a 1.7 percent contraction.

U.S. data today will show growth in wholesale inventories slowed in October, according to economist estimates.

Tesco Tumbles

Tesco slumped 13 percent after saying its full-year trading profit won’t exceed 1.4 billion pounds ($2.2 billion). The retailer, which has been losing market share to discounters, said it is adding staff, increasing product availability and investing in prices in order to improve its customer offering.

Energy-related companies slid. Brent and West Texas Intermediate declined to five-year lows as Iraq followed Saudi Arabia in cutting prices for crude sales to Asia. Total SA led losses, falling 2.9 percent, and BP Plc dropped 2.6 percent.

A gauge of mining companies on the Stoxx 600 dropped to its lowest level since August 2013. JPMorgan Chase & Co. cut its forecasts for iron ore through 2017, saying prices will extend declines as growth in low-cost supply from the world’s largest producers outstrips demand. Rio Tinto Group contributed the most to the decline, falling 2.4 percent. BHP Billiton Ltd. retreated 2.6 percent.

Euronext Drops

Euronext NV slid 5 percent as Intercontinental Exchange Inc. sold the last of its shares in the pan-European exchange. The Atlanta-based derivatives exchange raised 96.8 million euros ($119 million) by offloading 4.2 million shares, or about 6 percent of the European company.

Deutsche Bank AG slipped 2.4 percent. The U.S. government accused Germany’s largest lender of using underfunded shell companies to evade taxes in a lawsuit seeking $190 million in taxes, penalties and interest.

Royal Bank of Scotland Group Plc lost 1.3 percent. The lender is seeking offers for its Coutts International private bank as soon as this week, according to a person with knowledge of the matter.