GLOBAL MARKETS-Pessimism trumps data, euro and U.S. stocks fall

                                
 * Wall Street drops on economic pessimism
                                
 * Euro skids to three-week low of $1.2747
                                
 * Crude oil slips, spot gold edges higher
                                
 * German Q2 GDP beats estimates, rises 2.2 percent
 (Updates with U.S. market close, adds comment)
                                
 By Daniel Bases
                                
 NEW YORK, Aug 13 (Reuters) - U.S. and German economic data
looked promising on Friday, but pessimism regarding the global
economic recovery pushed the euro to a three-week low and led
to Wall Street's worst week in a month and a half.
                                
 A slight rise in U.S. consumer confidence for early August,
plus a small advance in retail sales and an increase in
business inventories were not enough to sustain confidence in
the U.S. economy. For more, see: [ID:nN13180040]
                                
 Tuesday's U.S. Federal Reserve decision to address a
slowdown in the U.S. economic recovery by buying more
Treasuries fueled doubts about the economic recovery and led to
the sell-off in stocks that pushed the S&P 500 stock index down
3.8 percent for the week. [nFEDAHEAD].
                                
 "We've seen a succession of bad news this week that was
punctuated by the Fed's comments, so while we have some
semblance of self-sufficiency, it's clear we'll be in a
slow-growth period for a long time," said Steven Baffico,
senior managing director at Claymore Securities in Lisle,
Illinois.
                                
 Germany's 2.2 percent second-quarter growth -- dwarfing
forecasts of a 1.3 percent rise and marking its best quarter
since before reunification -- sparked fears that the peak in a
lackluster economic rebound had been reached. [ID:nLDE67C0YX]
                                
 French GDP growth also exceeded forecasts.[ID:nLDE67C0DK]
                                
 Crude oil prices slipped, while gold rose. The precious
metal, however, was down from a one-month high reached earlier
in the session.
                                
 A disappointing auction of Italian government bonds
undermined peripheral euro zone debt prices, driving investors
into benchmark German Bunds. [GVD/EUR]
                                
 At the close, the Dow Jones industrial average <.DJI> fell
16.80 points, or 0.16 percent, to 10,303.15. The Standard &
Poor's 500 Index <.SPX> lost 4.36 points, or 0.40 percent, to
1,079.25. The Nasdaq Composite Index <.IXIC> dropped 16.79
points, or 0.77 percent, to 2,173.48.
                                
 Pressuring the Nasdaq, Google Inc <GOOG.O> was down 1.15
percent to $486.35, and Research in Motion Ltd <RIMM.O>
<RIM.TO> dropped 1.42 percent to $53.40.
                                
 India may shut down Google's messaging services over
security concerns, the Financial Times reported, and the
government has threatened a similar crackdown on RIM's
BlackBerry services. [ID:nSGE67C00W]
                                
 The pan-European FTSEurofirst 300 <.FTEU3> index of top
shares rose 0.28 percent to 1,045.65.
                                
 However, Delhaize <DELB.BR> plunged more than 11 percent
after the Belgian supermarket group cut its 2010 outlook.
[ID:nLDE67A0YB]
                                
 "(European) volumes are pitiful," said Andy Lynch, fund
manager at Schroders. "Price discovery is pretty limited. The
next movement is probably down. The American recovery is still
in doubt ... It's all rather depressing."
                                
 The MSCI world equity index <.MIWD00000PUS> and the Thomson
Reuters global stock index <.TRXFLDGLPU> fell slightly.
                                
 EURO STUMBLES
                                
 The euro fell against the U.S. dollar, retreating from the
highs fueled by Germany's upside economic surprise.
                                
 The euro dropped as low as $1.2747 <EUR=>, off 0.59
percent, marking the weakest level since July 22, according to
Reuters data.
                                
 "Subtle fears that the problems in Europe have not
evaporated were highlighted well this week by the focus on the
weaker-than-expected Italian bond auction," said Camilla
Sutton, chief currency strategist at Scotia Capital in
Toronto.
                                
 "Today's (data) releases were positive for the euro,"
Sutton said. "The inability to rally on good news is never a
good sign."
                                
 For the week the dollar was on pace to record its best
performance in almost two years against a basket of currencies
of its major trading partners.<.DXY>.
                                
 Against the yen <JPY=> the greenback was up 0.35 percent at
86.23 yen, above this week's 15-year trough of 84.72 yen.
                                
 U.S. Treasury bond yields fell on fresh safe-haven buying
after the U.S. data pointed to low growth and low inflation.
Benchmark 10-year Treasury yields dropped to 2.677 percent
<US10YT=RR>.
                                
 September Bund futures <FGBLc1> hit a record high at
131.44, surpassing the previous peak at 131.40 set on Thursday,
and were last up 12 ticks on the day at 131.34. The 10-year
Bund yield <DE10YT=TWEB> plumbed a record low at 2.399
percent.
                                
 U.S. light sweet crude oil <CLc1> settled down 35 cents to
$75.39 per barrel. Spot gold prices <XAU=> rose $3.75 to
$1,214.95.
 (Additional reporting by Ryan Vlastelica, Wanfeng Zhou, Angela
Moon, Brian Gorman, Naomi Tajitsu and Ian Chua Tamawa Desai;
Editing by Paul Simao)