Stimulus fears haunt world share markets, dollar recovers

By Herbert Lash

NEW YORK (Reuters) - Global equity markets drifted lower on Friday as investors were beset by worries that central bank stimulus may be curtailed, but the dollar recovered against the euro to trade almost flat after better-than-expected U.S. durable goods data for April.

Wall Street opened lower, heading toward its first weekly decline since mid-April, and European stocks also fell after testimony by Federal Reserve Chairman Ben Bernanke earlier this week sparked speculation the Fed will soon trim its bond buying.

"Markets are looking for a reset and a retracement lower, closer to more compelling valuations," said Peter Kenny, chief market strategist at Knight Capital in Jersey City, New Jersey.

After Bernanke's congressional testimony and the minutes from the latest Federal Open Market Committee meeting were released on Wednesday, there was a shift that "reintroduced a sense of caution that has long been absent" in markets, he said.

MSCI's all-country world equity index fell 0.42 percent, while Europe's broad FTSE Eurofirst 300 index of leading shares fell 0.57 percent to 1,222.92.

On Wall Street, the Dow Jones industrial average was down 58.52 points, or 0.38 percent, at 15,235.98. The Standard & Poor's 500 Index was down 9.58 points, or 0.58 percent, at 1,640.93. The Nasdaq Composite Index was down 20.89 points, or 0.60 percent, at 3,438.52.

Durable goods orders, which range from toasters to aircraft, increased 3.3 percent last month, the Commerce Department said, compared with the consensus forecast for a rise of 1.5 percent.

Commerce also revised prior readings for orders to show a smaller decline in March than previously estimated.

The euro was last at $1.2951, up about 0.12 percent against the dollar.

The dollar was last 1.02 percent lower against the yen at 100.97 yen..

Oil was poised to post its biggest weekly loss in more than a month as Brent fell below $102 per barrel, pressured by ample supply and a sluggish recovery that could dent demand for fuel.

Brent fell 60 cents to $101.84 a barrel. U.S. crude fell 94 cents to $93.31 a barrel.

The benchmark 10-year U.S. Treasury note was up 9/32 in price to yield 1.9843 percent.

(Reporting by Herbert Lash; Editing by James Dalgleish)