European stocks fell as companies from Telefonica SA to Alcatel-Lucent SA and Unilever reported earnings.

European stocks fell for a fourth day yesterday as reports showed the U.K. economy shrank the most in three years last quarter, German business confidence declined more than forecast, and U.S. new-house sales unexpectedly fell last month.

Telefonica dropped 5.8 percent to 8.16 euros after the company scrapped a 1.50 euro-a-share dividend for 2012 and said it will resume half of the payout toward the end of next year, citing an “extremely challenging” economic environment. The move will save the company an estimated 10.2 billion euros ($12.4 billion).

Alcatel-Lucent sank 9 percent to 80 euro cents after France’s largest network-equipment supplier announced job cuts as part of a plan to save an additional 750 million euros. The company’s net loss, its first in five quarters, was 254 million euros, or 11 cents a share, compared with net income of 43 million euros, or 2 cents, a year earlier.

FTSE 100 5,483.75 -14.57 -0.26%        

CAC 40  3,073.62   -8.12 -0.26%

DAX 6,340.48         -66.04 -1.03%