European stocks close:

European stocks dropped from a five- month high as a report showed that the U.S. economy grew at a slower pace in the fourth quarter than economists had predicted.

A U.S. Commerce Department report today showed that the world’s largest economy expanded in the fourth quarter at a slower pace than economists had forecast. Gross domestic product, the value of all goods and services produced, grew at a 2.8 percent annual pace.

European Union Economic and Monetary Affairs Commissioner Olli Rehn said Greece’s government will probably reach an agreement on a debt swap with its private creditors this month.

The Institute of International Finance said that it made “some progress” at a meeting last night in Athens between managing director Charles Dallara and Greek Prime Minister Lucas Papademos. Talks continued today.

National benchmark indexes fell in every western European market except Iceland today. The U.K.’s FTSE 100 Index slid 1.1 percent, France’s CAC 40 Index declined 1.3 percent and Germany’s DAX Index lost 0.4 percent.

BP retreated 2.6 percent to 464.55 pence for the biggest drag on the Stoxx 600. A judge ruled that the U.K. oil company can’t collect from Transocean part of the $40 billion in cleanup costs and economic losses caused by the 2010 Gulf of Mexico spill. BP sued Transocean in April to recover a share of its damages and costs. The blowout of the Macondo well led to the world’s largest accidental oil spill.

Transocean advanced 0.9 percent to 43.83 Swiss francs.

BNP Paribas retreated 3.3 percent to 34.64 euros after JPMorgan downgraded France’s biggest bank to “neutral” from “overweight.” Credit Agricole SA dropped 1.6 percent to 4.94 euros.

Waertsilae Oyj, the world’s largest maker of ship motors and power plants, fell 5.3 percent to 25.54 euros after reporting fourth-quarter sales of 1.24 billion euros, missing the average analyst estimate of 1.38 billion euros. The company posted operating profit of 145 million euros, falling short of the average projection of 151 million euros.