* Stocks soften further on weaker U.S. GDP data
* U.S. consumer sentiment rises
* G20 meeting in focus, dollar rises
(Updates to U.S. markets; changes byline, dateline, previous
LONDON)
By Al Yoon and Jeremy Gaunt
NEW YORK/LONDON, June 25 (Reuters) - Worries about the
fragility of the global economic recovery drained strength from
financial markets on Friday, knocking world stocks lower for
the fourth straight session ahead of a weekend summit of Group
of Eight and Group of 20 rich and developing nations.
The dollar gained and the euro slipped amid concerns of
fiscal strains in Europe and a report that showed U.S.
first-quarter growth slower than first estimated. Consumer
sentiment in the United States rose, however, providing limited
support for Wall Street shares.
The U.S. data capped a week in which investors have been
pulling back a bit from riskier assets as evidence grew that
economic growth, particularly in the United States, may fall
short of 2010 forecasts.
"Overall we have a modest recovery going on," said Paul
Ballew, chief economist at U.S. insurer Nationwide in Columbus,
Ohio. "The conversation of a double-dip recession is a bit
aggressive. You are getting growth in fits and starts, rather
than an outright contraction."
On Wall Street, financial shares gained as uncertainty
ebbed following an historic agreement to overhaul financial
regulations.
U.S. lawmakers hammered out new Wall Street regulations in
the early hours on Friday, though the measure must still win
approval from both chambers of Congress before U.S. President
Barack Obama can sign it into law.
G8 leaders meeting on Friday in Canada -- turning into the
G20 on Saturday -- are set to grapple with fears that the
spending cuts and tax rises being promulgated by European
governments to cut debt will hurt the recovery. Meanwhile,
Washington is warning against cutting too far and too fast.
MSCI's all-country world index <.MIWD00000PUS> declined 0.3
percent, heading for a 3 percent weekly loss. Its emerging
market counterpart <.MSCIEF> dipped 0.6 percent.
In late morning trading in New York, the Dow Jones
industrial average <> dropped 55.09 points, or 0.54
percent, to 10,097.71. The Standard & Poor's 500 Index <.SPX>
fell 3.84 points, or 0.36 percent, to 1,069.85. The Nasdaq
Composite Index <> slipped 7.92 points, or 0.36 percent,
to 2,209.50.
European shares turned negative after initially bucking the
trend. The FTSEurofirst 300 <> fell 0.7 percent adding to
three previous days of losses.
"No one is really wanting to take any big positions ahead
of the G20," said Justin Urquhart Stewart, director at Seven
Investment Management.
Earlier, Japan's Nikkei average <> fell 1.9 percent.
DOLLAR FIRMER
The dollar rose against the euro and fell against the yen
on Friday as investors sought safety amid ongoing concerns
about fiscal strains in the euro zone and after the earlier
report of soft U.S. economic growth.
Funding concerns in the euro zone also prompted caution as
banks need to repay some 442 billion euros in one-year loans to
the European Central Bank next week.
The dollar rose against a basket of major trading-partner
currencies, with the U.S. Dollar Index <.DXY> up 0.05 percent
at 85.78. The euro <EUR=> fell 0.28 percent to $1.2299.
Against the Japanese yen, the dollar <JPY=> slipped 0.26
percent to 89.31 yen.
U.S. Treasury debt prices rose after the disappointing
report on U.S. economic growth. Benchmark 10-year Treasury
notes <US10YT=RR> rose 8/32 in price, while yields declined to
3.11 percent from 3.14 percent late Thursday.
Core euro zone government bonds struggled to make further
headway after three consecutive sessions of gains drove futures
to two-week highs. Losses were limited by stock weakness.
In commodities markets, U.S. light sweet crude oil <CLc1>
rose 66 cents, or 0.86 percent, to $77.17 per barrel, and spot
gold prices <XAU=> rose $9.50, or 0.76 percent, to $1,253.50 an
ounce.
