LONDON (Reuters) - European shares and commodities fell on Friday as Greece appeared unable to form a government and Chinese data came in unexpectedly weak, fuelling fears of a global economic slowdown and keeping safe-haven German bond yields close to record lows.
The FTSEurofirst index of top European stocks dipped 0.7 percent to 1011.82 points, led by banking shares, which were hit by a shock $2 billion trading loss at top U.S. bank JPMorgan.
The MSCI world equity index was on course for a second weekly loss of more than 2 percent and emerging equities were set for their biggest weekly loss since November, as investors dropped riskier assets.
U.S. stock index futures signalled a lower open on Wall Street, with futures for the S&P 500 down 0.53 percent.
Investors fear anti-austerity votes in Greece and France could drag the euro zone back into the danger zone, pushing peripheral bond yields up to unsustainable levels, after cheap European Central Bank loans and plans for bigger bailout funds had appeared to help the bloc avoid the worst.
Bund yields hovered near record lows of 1.50 percent as Greek politicians appeared unable to form a government to ensure the release of bailout funds needed to prop up its indebted economy, while the European Commission predicted a contraction in euro zone GDP in 2012.
The euro hit a 3-1/2 month low of $1.2905, then climbed after Greek conservative leader Antonis Samaras raised hopes a coalition deal could be reached soon, only to drift lower again.
The common currency last traded around $1.2930.
"Big day for Greece, Spain, the euro and the U.S. banking sector. Overnight news with even JPMorgan not able to control its traders will mean further regulation and lower profits," said Lex van Dam, hedge fund manager at Hampstead Capital, which manages $500 million of assets.
The leaders of Greece's once-dominant political parties struggled to avert a new election, which a poll showed would all but wipe them out and give victory to a radical leftist who rejects an EU bailout.
But the leader of moderate Democratic Left party Fotis Kouvelis dashed hopes of a coalition deal, saying that he would not back a pro-bailout government and that the country was heading to a repeat election.
Markets are also waiting to hear how Spain aims to shore up the country's lenders, which could send shares lower if its plans disappoint.
Brent crude futures fell by $1 a barrel after China reported that industrial production from its huge factory sector had weakened sharply in April.
Brent crude June last traded at $111.81, off session lows of $111.40 a barrel.
Gold, often seen as a safe haven commodity, was on track for its worst weekly fall since March, having suffered in this week's broad sell-off. Spot gold hit a four-month low earlier in the session and last traded around $1580.81 an ounce.
The Spanish government is expected to present further reforms to clean up its ailing banking sector after effectively taking over one of the country's biggest banks, Bankia earlier this week.
(Additional reporting by Richard Hubbard and Tricia Wright; Editing by Hugh Lawson)
