* World stocks ease; BP <BP.L> surges
* Dollar <.DXY> pressured as U.S. economic concerns grow
* U.S. two-year Treasury yields hit record low
* Eyes on U.S. corporate earnings
By Tamawa Desai
LONDON, July 16 (Reuters) - World stocks eased on Friday on
a worsening outlook for the U.S. economy that also pushed the
dollar to 7-month low against the yen and near a 2-month trough
versus the euro.
The FTSEurofirst 300 index <> surrendered early gains
to shed 0.1 percent after Asian stocks fell, with the Nikkei
average <> down nearly 3 percent for its worst one-day
percentage loss in more than a month [].
That came after Wall Street ended flat, led by a sudden
turnaround in Goldman Sachs <GS.N >and BP, after spending much
of Thursday in negative territory on an unexpected fall in
regional factory activity and a third straight month of decline
in producer prices raised concerns about deflation
[].
Shares in Goldman Sachs gained after the firm agreed to pay
$550 million to settle civil fraud charges [] while
BP's stock rose after it said it had capped an oil spill that
started in April. []
BP rose a further 3 percent in European trade, putting a
floor under European losses.
The MSCI world equity index <.MIWD00000PUS> was flat at
285.78. The Thomson Reuters global stock index <.TRXFLDGLPU>
fell 0.2 percent.
Concerns about the U.S. outlook overshadowed a strong start
to the U.S. earnings season. JPMorgan Chase & Co <JPM.N> beat
expectations on Thursday. []
Bank of America Corp <BAC>, Citigroup <C.N> and General
Electric <GE.N> are among those scheduled to release results
later on Friday.
Q2 SLOWDOWN
"The earnings season is off to a very good start, but the
big question remains: how bad will be the slowdown in the second
half? Until we get a clear answer, the market will be prone to
big swings like the ones we've seen over the past 20 days," said
Philippe Gijsels, senior equity strategist at Fortis Bank in
Brussels.
The dollar fell within a whisker of the July 1 low of 86.96
yen, its lowest since early December, as concerns mounted over
the world's largest economy. Stop-loss sales were seen below
86.95 yen while bids were cited at 86.50 yen ahead of option
barriers.
Growth-linked currencies such as the Australian <AUD=D4> and
New Zealand dollars <NZD=D4> also fared poorly, falling 0.6
percent and 1.4 percent against the U.S. dollar, respectively.
The euro <EUR=> held near a two-month high of $1.2955 hit on
trading platform EBS on Thursday, when it jumped 1.6 percent
against the greenback.
Receding concerns about euro zone sovereign debt problems
also buoyed the euro after smooth absorption of euro zone
peripheral bond auctions earlier this week.
Lower U.S Treasury yields, with the two-year yield falling
to a record low of 0.58 percent on Thursday, also undermined the
greenback.
Some said the dollar's declines could be limited.
"The dollar's adjustment can be justified as the Fed may
have to do more easing, but in the longer term it could start to
benefit from safe-haven flows," said Jane Foley, research
director at Forex.com.
Market players will keep an eye on U.S. inflation data is
due out at 1230 GMT. Economists forecast June consumer price
index to be flat on the month after falling 0.2 percent in May.
Bund futures <FGBLc1> were slightly lower at 128.62.
Oil slid for a third day on Friday towards $76 a barrel
<CLc1> while gold held steady <XAU=>.
(Additional reporting by Blaise Robinson in Paris and Neal
Armstrong in London; editing by John Stonestreet)
