* Worries over fledgling economic recovery sap equities
* U.S. Treasury prices sag on pending supply, rate worries
* Sterling slips versus U.S. dollar, euro on weak UK data
* Oil dips below $81 a barrel as dollar firms, stocks fall (Updates with U.S. markets, changes byline, dateline from LONDON)
By Herbert Lash
NEW YORK, Oct 23 (Reuters) - The U.S. dollar rose and global stocks fell on Friday as energy shares followed crude prices lower and investors worried about the pace of a fledgling U.S. recovery.
The dollar and euro soared against sterling after data showed the UK economy was still mired in recession, stunning investors who had expected a return to growth. For details, see [ID:nN23107079]
Sterling plunged nearly three cents against the dollar and notched its biggest one-day decline against the euro in six months as traders bet the Bank of England was more likely to expand its quantitative easing program to secure a recovery.
Oil stocks reversed early gains as U.S. crude futures
"We are back to a situation where the markets have rallied quite strongly. We have had a interesting week of both good and bad news. I just think this is profit taking," said Howard Wheeldon, strategist at BGC Partners.
Weak industrial sector earnings made investors question the
recovery's strength, which overshadowed robust results from
technology heavyweights Microsoft Corp
Shares of Burlington Northern Santa Fe Corp
Shortly after 1 p.m. (1700 GMT), the Dow Jones industrial average <.DJI> was down 82.60 points, or 0.82 percent, at 9,998.71. The Standard & Poor's 500 Index <.SPX> was down 10.69 points, or 0.98 percent, at 1,082.22. The Nasdaq Composite Index <.IXIC> was down 4.68 points, or 0.22 percent, at 2,160.61.
The pan-European FTSEurofirst 300 <.FTEU3> index of top shares closed down 0.6 percent at 1,008.88 points. The index is up 21 percent this year and has gained almost 56 percent from a record low hit in March after sliding 45 percent in 2008.
"If you go through the corporate earnings results, the top line is still suggesting it's a difficult environment for improving sales," said analyst Jane Foley of FOREX.com.
Stocks fell despite a surge in sales of previously owned U.S. homes to a two-year high in September. Analysts said the rise was partially driven by a tax incentive for first-time buyers. [ID:nN2395552]
Weekly U.S. government data that showed a decrease in stores of gasoline helped push crude prices lower, even as overall fuel inventories are still much higher than a year ago. [EIA/S]
U.S. Treasury debt prices eased as investors positioned to cut prices ahead of next week's record sales of government notes. [ID:nN23432472]
The benchmark 10-year U.S. Treasury note
Euro zone government bond prices also sagged, driving benchmark 10-year Bund yields to a one-month high, as a batch of upbeat regional data strengthened expectations of a durable recovery in the single currency bloc.
Euro zone services business grew at its fastest pace in 20 months in October, quicker than expected, while manufacturing activity expanded for the first time in over a year, suggesting the recovery is gathering pace. [ID:nLAG003856]
The dollar rose against a basket of major currencies, with the U.S. Dollar Index <.DXY> up 0.32 percent at 75.334.
The euro
Spot gold prices
The MSCI index of Asia Pacific stocks traded outside Japan
<.MIAPJ0000PUS> was up 1.3 percent, while the Thomson Reuters
index of regional shares
The Nikkei index <.N225> in Tokyo finished up 0.2 percent. (Reporting by Leah Schnurr, Steven C. Johnson and Joshua Schneyer in New York; Joanne Frearson, Barbara Lewis and Emelia Sithole-Matarise in London; writing by Herbert Lash; Editing by Kenneth Barry)