By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets retreated on Monday after German industrial production data missed expectations and spurred worries that Europe's economic engine is losing steam.

The Stoxx Europe 600 index dropped 0.1% to 347.66, after closing out last week with the biggest weekly advance since March.

Germany's DAX 30 index fell 0.1% to 10,005.31, while France's CAC 40 index gave up 0.3% to 4,457.75. The U.K.'s FTSE 100 index slipped 0.1% to 6,856.88.

The losses came after data showed industrial production in Germany dropped 1.8% in May, marking the biggest monthly slide since April 2012. That is well below expectations of a flat rate for May in a survey of economists by The Wall Street Journal.

The numbers follow a report from Friday that showed German manufacturing orders fell 1.7% in May, also weaker than expected.

Among notable movers in Europe, shares of Sky Deutschland AG dropped 2.6% after Nomura cut the cable-TV company to neutral from buy, according to Dow Jones Newswires.

PostNL NV surged 16% after the Dutch postal company raised its full-year guidance following a strong mail performance in the Netherlands.

Shares of Banco Espirito Santo SA climbed 6.9% after the bank said on Saturday that shareholders had chosen the current head of Portugal's debt agency to become its chief financial officer.

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