* MSCI world equity index retreats from 12-month high
* Dollar gains as confidence ebbs
* Bank of America, General Electric results disappoint
By Al Yoon
NEW YORK, Oct 16 (Reuters) - World stocks fell and the euro
retreated against the U.S. dollar on Friday as weak results
from General Electric Co and Bank of America Corp dimmed
confidence in a profit-driven economic recovery.
GE reported a 42-percent drop in profit and Bank of America
posted a quarterly loss, leading investors to rein in risk
appetites whetted by strong JPMorgan Chase & Co results earlier
in the week.
European and U.S. shares sank, and safe-haven U.S. Treasury
notes gained, as the corporate results disappointed investors
who on Wednesday drove the Dow Jones industrials average above
the key 10,000 mark for the first time in a year.
"The disappointing results from Bank of America and GE do
not mean the whole earnings season will go sour, but it is
raising a question mark among investors," said Peter Cardillo,
chief market economist at Avalon Partners in New York.
Oil gained to more than $78 per barrel <CLc1>, adding to a
seven-day winning streak.
U.S. indexes dropped. The Dow Jones industrial average
<> fell 71.79 points, or 0.71 percent, to 9,991.15. The
Standard & Poor's 500 Index <.SPX> lost 8.35 points, or 0.76
percent, to 1,088.21. The Nasdaq Composite Index <> gave
up 13.19 points, or 0.61 percent, at 2,160.10.
Europe's FTSEurofirst index declined 0.75 percent to
1,009.62. Earlier, in Japan, the Nikkei 225 Index <> rose
0.18 percent to 10,257.56.
While the MSCI world equity index <.MIWD00000PUS> was down
0.97 percent on the day, stocks are near 12-month highs set in
the previous trading session, and investors remained relatively
upbeat on prospects for quarterly profits.
Through Thursday, Thomson Reuters Proprietary Research
shows that of around 10 percent of S&P 500 index companies that
have reported, 82 percent have beaten expectations. Google, IBM
and Goldman Sachs Group Inc. results continued a trend of
beating analysts' forecasts.
The global equity index is up 73 percent since touching a
six-year trough in March, although still 7 percent below its
level before Lehman Brothers collapsed last September.
But as a reminder of a fragile economic recovery, U.S.
consumer confidence fell unexpectedly this month on concerns
over the state of personal finances. The figures overshadowed
an earlier report on surprisingly strong U.S. industrial
production in September, up for the third consecutive month.
"Investors are having a logical debate right now, which is,
What is the recovery going to look like and what is its effect
on corporate profits?" said Bruce Zaro, chief technical
strategist at Delta Global Advisors in Boston.
GREENBACK CLIMBS
The U.S. dollar index, which tends to rise as risk appetite
dips, climbed <.DXY> up 0.14 percent.
"There's been a decent move (down) over the week (for the
dollar), and ahead of the weekend you have to ask yourself,
'Are they (investors) going to push it much more?' Unlikely,"
said Paul Mackel, senior currency strategist at HSBC in
London.
"Equities are looking a bit shaky, and it's the end of the
week. So put the two together and the dollar is biased to the
upside," he added.
The euro <EUR=> dipped 0.43 percent to $1.4878 from a
previous session close of $1.4943. Against the Japanese yen,
the dollar <JPY=> rose 0.40 percent to 90.91.
U.S. Treasury debt prices rose on Friday as stock market
losses underpinned demand for safe-haven U.S. government debt
and data offered a tentative outlook for an economic recovery.
Benchmark 10-year U.S. Treasury notes <US10YT=RR> rose
8/32, pushing the yield down to 3.44 percent.
(Additional reporting by Simon Falush in London and Angela
Moon in New York; Editing by Padraic Cassidy)
