European stocks declined the most in five weeks, paring yesterday’s biggest rally for the region’s benchmark index in almost a month, as U.S. manufacturing activity fell faster than estimated, and companies in the world’s largest economy added fewer workers than forecast.

Stocks extended losses after data showed the Institute for Supply Management’s index of U.S. non-manufacturing businesses, which covers almost 90 percent of the economy, fell to 54.4 in March from 56 in the prior month. That fell short of economists’ median forecast for 55.5. Readings above 50 indicate expansion.

A U.S. payrolls report from the ADP Research Institute showed companies added 158,000 workers in March, missing the median economist forecast for 200,000 additions. The data comes ahead of the Labor Department’s monthly non-farm payrolls report on Friday.

National benchmark indexes declined in 15 of the 18 western European markets. Germany’s DAX fell 0.9 percent, the U.K.’s FTSE 100 slid 1.1 percent, and France’s CAC 40 lost 1.3 percent.

Vodafone led a gauge of phone companies lower, falling 3.1 percent to 186.2 pence, after Verizon denied a Financial Times report that said it had discussed a plan with AT&T Inc. to make a joint offer for the U.K. telecommunications operator. While Verizon reiterated interest in buying Vodafone’s stake in the companies’ Verizon Wireless joint venture, it doesn’t currently plan to bid for the whole company, according to a filing yesterday.

Telecom Italia SpA lost 5.4 percent to 53.6 euro cents and France Telecom SA retreated 4.4 percent to 7.66 euros after UBS AG downgraded both phone companies to sell from neutral late yesterday. Analysts cited downside earnings risk for Telecom Italia, and cost cutting by competitors for France Telecom.

Rexel climbed 1.9 percent to 17.69 euros after Goldman Sachs raised its recommendation for the French electric equipment distributor to buy from neutral, citing an acceleration in the U.S. commercial market.