Global Stocks Fall Ahead of U.S. GDP

Updated from 5:09 a.m. EDT

LONDON -- World markets fell Friday despite another batch of positive earnings statements in Asia and Europe as investors fretted about a key U.S. economic growth report due later.

In Europe, the FTSE 100 index of leading British shares was down 22.80 points, or 0.4%, at 5,291.15 while Germany's DAX fell 32.95 points, or 0.5%, to 6,101.75. The CAC-40 in France fell 21.82 points, or 0.6%, to 3,630.09.

Wall Street was also expected to drop at the open following a late reversal Thursday as futures were trading lower.

All that could change, though, depending on how the U.S. growth data comes out.

At the moment, the consensus in the markets is that the world's biggest economy expanded about 2.5% in the April-to-June quarter. That's down from 2.7% in the first quarter and not nearly enough to get the jobs market going again.

Investors are particularly fretful about the release because it comes at the end of a run of worse than expected economic data and a warning from the U.S. Federal Reserve that the U.S. economy is losing its momentum.

"The risk for financial markets is of a below-expectation number in the light of recent weakness in U.S. economic data," said Neil MacKinnon, global macro strategist at VTB Capital.

The dollar has borne the brunt of market concerns about the pace of the U.S. economic recovery. On Thursday, the euro managed to hit a new 11-week high of $1.3106.

By mid morning, however, the dollar had recovered some of its poise as investors nervously awaited the GDP data, and the euro was down 0.5% at $1.3007.

Analysts say that if U.S. growth comes in below expectations, both stocks and the dollar will suffer a selloff. However, if the figures surprise on the upside, relief could send both higher.

With the focus so heavily on the U.S. data, there's been little market impact to another array of positive earnings, from the likes of electronics companies Samsung and Sony(SNE), British Airways and French electronics firm Alcatel-Lucent(ALU).

Earlier in Asia, Japan's Nikkei 225 stock average dropped 158.72 points, or 1.6%, to 9,537.30 for a second straight day of decline. The Nikkei was hit again by the continuing export-sapping appreciation of the yen. A strong yen also reduces the value of profits brought back from overseas -- a major concern for Japanese exporters this year.

By mid morning London time, the dollar was 0.8% lower at 86.20 yen.

Elsewhere, South Korea's Kospi declined 0.7% to 1,759.33 and the S&P/ASX 200 in Australia fell 0.7% to 4,493.50. China's Shanghai Composite Index gave up 0.4% to 2,637.50 and benchmarks in Taiwan, Singapore and Indonesia also retreated. Markets in Malaysia, New Zealand and Vietnam rose.

Benchmark crude for September delivery was down 65 cents at $77.71 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.37 to settle at $78.36 on Thursday.

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