European stocks dropped, paring their seventh successive weekly advance, as the yield premium for Spanish benchmark bonds over German bunds surged to a record, sparking concern the euro-area debt crisis is deepening.

Spanish bonds declined, pushing the extra yield investors demand to hold the nation’s 10-year securities instead of similar-maturity German bunds to the most on record. The similar spread for Italy surged above 5 percentage points for the first time since Jan. 16. Bunds, which serve as a haven for investors pulling money out of troubled economies, extended a third weekly gain.

Euro-area finance ministers gave the final approval for the bailout of Spanish banks for as much as 100 billion euros ($122 billion). Today’s decision, made on a conference call, paves the way for a first payment from the region’s temporary rescue fund, the European (SXXP) Financial Stability Facility.

National benchmark indexes dropped in all of the 18 western European markets today, except in Iceland and Greece. Germany’s DAX fell 1.9 percent, while the U.K.’s FTSE 100 lost 1.1 percent. France’s CAC 40 slid 2.1 percent. Spain’s IBEX 35 slumped 5.8 percent, the most since May 2010, and Italy’s FTSE MIB declined 4.4 percent.

Vodafone, Europe’s largest mobile-phone company, fell 1.7 percent to 180 pence after saying that its service revenue, excluding currency swings and the impact of acquisitions, gained 0.6 percent in the three months through June. Analysts had predicted growth of 0.8 percent, according to the average of estimates in a Bloomberg survey.

Scania rallied 3.9 percent to 120.10 kronor. The company said second-quarter orders rose from the first three months of 2012 because of Russian demand, and it predicted a growing need in Europe to replace vehicles.