* U.S., Europe stocks can't sustain 17-month highs
* Greece worries weigh; euro hits 2-week low vs dollar
* Investor sentiment darkens, correction seen
(Updates with U.S. closing prices)
By Al Yoon
NEW YORK, March 19 (Reuters) - Global shares slipped from
17-month highs on Friday as weakness in earnings and a rising
dollar stunted long-running rallies, while concerns over
Greece's debt burden kept pressure on the euro.
Oil suffered its steepest drop in six weeks as the dollar
firmed against the euro and other currencies. Cheaper crude oil
weighed on energy shares in the United States and Europe.
The euro posted its worst weekly performance against the
dollar since late January as traders waited to see if Greece
can secure aid from its fellow euro zone members at a European
Union summit next week. Greece has said that it might have to
turn to the International Monetary Fund for help.
"The tensions surrounding Greece are escalating. This whole
IMF situation has become a game of brinkmanship and the whole
uncertainty is undermining the euro," said Michael Woolfolk,
senior currency strategist at BNY Mellon in New York.
In equities, an early boost to bank shares came as British
lender Lloyds Banking Group <LLOY.L> said it would return to
profit this year after two years of heavy losses, helped by
lower bad debts and tight cost controls. Shares of Lloyds
jumped 8.2 percent in London, but European stocks closed lower
on a late-session selloff in resource-related sectors as
commodities prices fell. For details see [].
The MSCI world equity index <.MIWD00000PUS> fell 0.5
percent.
In U.S. equities, the Dow Jones industrial average <>
fell 37.19 points, or 0.35 percent, to 10,741.98. The Standard
& Poor's 500 Index <.SPX> slipped 5.93 points, or 0.51 percent,
to 1,159.90 and the Nasdaq Composite Index <> declined
16.87 points, or 0.71 percent, to 2,374.41.
Analysts warned of volatility due to "quadruple witching"
-- the expiration of U.S. stock index futures, stock index
options, stock options and stock futures.
"Even with a one-year rally of almost historical
proportions, investors remain in a very skeptical market," said
Keith Springer, president of Capital Financial Advisory
Services in Sacramento, California.
The number of individual investors who were bullish
declined nearly 10 percentage points to 35.4 percent in the
latest week, according to a survey by the American Association
of Individual Investors. Bearish calls rose 4.6 percentage
points to 29.9 percent.
Friday's decline was mostly a technical one after an 11
percent rise in the S&P 500 since Feb. 5, Springer said.
Barclays Capital, the investment banking arm of Barclays
Plc, on Thursday predicted equity markets would continue their
rally this year, but only after signs of stalling earnings
cause a second-quarter correction. The firm increased its 2010
target for the S&P 500 Index to 1,210 from 1,120.
Palm Inc's <PALM.O> stock plunged 29 percent to $4 a day
after it warned that quarterly revenue would fall far below
expectations, as tepid demand for its smart phones left
wireless carriers with piles of inventory. []
"When there are fewer and fewer customers ... the low end
of the totem pole gets squeezed out," said Capital Financial's
Springer. "That's what happens in a downturn."
A rising dollar and lower oil prices sapped energy stocks
-- the S&P Energy Index <.GSPE> fell about 1 percent.
In Europe, the FTSEurofirst 300 <> index of top
European shares closed 0.4 percent lower at 1,065.48.
The index earlier touched a 17-month high, boosted by bank
stocks UBS <UBSN.VX>, Barclays <BARC.L> and Credit Agricole
<CAGR.PA>, which ended up 1.5 percent to 1.7 percent.
But oil and metal prices took a beating while the dollar
rose. Dollar-denominated oil and metals become more expensive
for holders of other currencies when the dollar rises.
U.S. light sweet crude oil <CLc1> fell $1.54, or 1.87
percent, to $80.66 per barrel, also pressured after an industry
report suggested OPEC exports were rising. Spot gold prices
<XAU=> fell $20.10, or 1.79 percent, to $1,105.30 an ounce.
GREECE WORRIES
Concerns over Greece and doubts over whether euro zone
states will agree to any support package still hurt sentiment,
keeping the euro weak and hampering peripheral debt prices as
traders waited for next week's European Union summit.
The euro zone currency <EUR=> fell 0.52 percent against the
dollar to $1.3535, near its lowest level in more than two
weeks, while increased risk aversion helped flows into the U.S.
currency. The dollar <.DXY> rose 0.63 percent against a basket
of major currencies to 80.73.
"I think the market doubts whether next week's summit will
produce anything more specific in terms of a plan for Greece,"
said Chris Turner, head of FX strategy at ING.
Against the Japanese yen, the dollar <JPY=> gained 0.24
percent to 90.49 yen.
Weakness in equities aided sovereign debt, but U.S.
Treasury debt prices edged lower in the face of $118 billion in
debt next week. Benchmark 10-year note yields rose 0.02
percentage point to 3.70 percent.
(Additional reporting by David Brett and Naomi Tajitsu in
London and Rodrigo Campos in New York; Editing by Kenneth
Barry)
