* Disappointing earnings weaken stocks
* Europe down 1.4 percent, Japan 0.6 percent
* Wall Street set for weak start
* Dollar bounces off 14-month lows
* Euro zone government bonds flat
By Jeremy Gaunt, European Investment Correspondent
LONDON, Oct 22 (Reuters) - Disappointing corporate results
knocked equities lower on Thursday, set Wall Street up for a
poor start and helped the dollar bounce off 14-month lows.
Gold and oil both slipped as the dollar rose. Euro zone
government debt was stronger.
Investors in Europe and Asia picked up on Wednesday's
weakness on Wall Street where there was a late sell-off of
banking shares and where a wider-than-expected loss from Boeing
<BA.N> had hurt overall sentiment.
After the bell, eBay Inc <EBAY.O>, the global e-commerce
site, forecast fourth-quarter profit and revenue at the low end
of analysts' estimates.
The sour mood was compounded in Europe on Thursday when
Ericsson <ERICb.ST> posted lower-than-expected third-quarter
core earnings and said sales in its key mobile networks market
were hampered by tough market conditions.
World stocks as measured by MSCI <.MIWD00000PUS> were down
0.7 percent with the emerging market component off around 1
percent <.MSCIEF>.
Europe's FTSEurofirst 300 <> lost 1.3 percent. Earlier
Japan's Nikkei <> closed down 0.6 percent.
Earnings results have generally been better than expected so
far in this reporting season, particularly in the United States,
but shares are also around year highs, making them susceptible
to a fall if something disappoints.
"The market was poised for a retreat, but I'm not expecting
a major correction," said Christian Jimenez, president of Imene
Investment partners, in Paris. "At these levels, if all
companies would report satisfying results, that would justify
further gains on the market."
DOLLAR BOUNCE
The dollar rose broadly, pulling back from a 14-month low
against the euro and a currency basket as global stocks fell.
The currency has been trading in inverse correlation to
equities in recent months, based on shifting risk appetite among
investors.
Analysts said the dollar was still on a downward trend
because of generally positive earnings and the view that U.S.
interest rates will remain low.
"The euro's proximity to $1.50 suggests that the market is
not taking the current correction as too serious," said Michael
Klawitter, senior currency strategist at Commerzbank in
Frankfurt.
The euro was down 0.1 percent at $1.4977 <EUR=> after
breaking the $1.50 level on Wednesday. The dollar was up half a
percent against a basket of major currencies <.DXY>.
Euro zone government bonds were little changed.
Longer-dated paper remained close to near four-week lows hit
on Wednesday as the penultimate Federal Reserve purchase of U.S.
Treasuries reminded markets that support for government bond
markets from central bank buying may be nearing an end.
(Additional reporting by Blaise Robinson and Naomi Tajitsu,
editing by Mike Peacock)
(To read Reuters Global Investing Blog click on
http://blogs.reuters.com/globalinvesting; for the MacroScope
Blog click on http://blogs.reuters.com/macroscope)
