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European, US stocks drop as traders await Fed chief Bernanke speech, US growth estimate is cut
LONDON (AP) ' European and U.S. stocks fell on Friday as investors expected Federal Reserve Chairman Ben Bernanke would not promise new steps to help the U.S. economy ward off another recession.
Bernanke is due to deliver a highly anticipated speech at a conference later Friday in Jackson Hole, Wyoming, but expectations he might offer more stimulus have receded this week.
The Fed has already pledged low interest rates through to 2013. Some central bank watchers say the Fed has reached the limits of what a central bank can do to aid an economy that is beleaguered by problems that monetary policy can't fix ' high unemployment and massive government debt.
"The market is very volatile on low trading volume. Any news can be a big thing," said Jackson Wong, vice president at Tanrich Securities in Hong Kong.
Britain's FTSE 100 dropped 1.2 percent to 5,068.01 while Germany's DAX shed 2.5 percent to 5,442.23 and France's CAC-40 slipped 2.4 percent to 3,045.65.
Wall Street also dropped, with the Dow is down 0.9 percent at 11,050 and the S&P 500 down 1 percent at 1,147.
Market sentiment was also hurt by downbeat U.S. economy figures.
The Commerce Department said the U.S. economy grew in the April-June quarter at a 1 percent annual rate, down from an earlier estimate of 1.3 percent and below analyst expectations for a 1.1 percent reading. The data renewed concerns that the U.S. might be headed for another recession.
In Asia, Japan's Nikkei 225 swung between gains and losses throughout the day before closing with a 0.3 percent gain at 8,797.78. South Korea's Kospi rose 0.8 percent after a volatile morning to 1,778.95.
Hong Kong's Hang Seng gave up early gains and fell 0.9 percent to 19,582.88. Benchmarks in Australia, Singapore and the Philippines were also lower while stocks in mainland China were mixed.
Worries that the U.S. could be headed for another recession have in recent weeks caused huge volatility in equities, bonds and foreign exchange.
On Thursday, Germany's main index suffered a flash slide ' about 4 percent in 15 minutes ' that analysts and traders were at a loss to explain but which dented investor confidence in other global markets.
Bank stocks got some initial support from news that billionaire investor Warren Buffett will invest $5 billion in troubled Bank of America, the largest U.S. bank. Those gains, however, did not last long as the wider market fell.
Mainland Chinese shares were mixed with the benchmark Shanghai Composite Index edging 0.1 percent lower to 2,612.19, after dipping almost 1 percent earlier in the day. The smaller Shenzhen Composite Index gained 0.3 percent to 1,169.95.
In currency trading, the euro rose to $1.4433 from $1.4368 late in New York on Thursday. The dollar slipped to 77.01 yen from 77.55 yen.
Benchmark oil for October delivery was down 38 cents to $84.92 in electronic trading on the New York Mercantile Exchange. Crude rose 14 cents to finish at $85.30 on Thursday. In London, Brent crude for October delivery was down 44 cents to $110.18 on the ICE Futures exchange.
Traders were watching the violence in Libya for any signs that the country might stabilize and start working on restoring some of the 1.6 million barrels of oil it used to produce before its civil war erupted.
That and fears of a global economic slowdown have weighed on oil prices.
Pamela Sampson in Bangkok and Fu Ting in Shanghai contributed to this report.