* MSCI world equity index retreats from 12-month high
* Dollar gains as confidence ebbs
* Bank of America, General Electric results disappoint
By Al Yoon
NEW YORK, Oct 16 (Reuters) - World stocks fell and the euro retreated against the U.S. dollar on Friday as weak results from General Electric Co and Bank of America Corp dimmed confidence in a profit-driven economic recovery.
GE, the biggest U.S. conglomerate, reported a 42-percent drop in profit and Bank of America posted a quarterly loss, leading investors to rein in risk appetites whetted by strong JPMorgan Chase & Co results earlier in the week.
European and U.S. shares sank, and safe-haven U.S. Treasury notes gained, as the corporate results disappointed investors who on Wednesday drove the Dow Jones Industrial Average above the key 10,000 mark for the first time in a year.
"The disappointing results from Bank of America and GE do not mean the whole earnings season will go sour, but it is raising a question mark among investors," said Peter Cardillo, chief market economist at Avalon Partners in New York.
Oil gained,
U.S. indexes dropped. The Dow industrials <.DJI> fell 67.03 points, or 0.67 percent, to 9,995.91. The Standard & Poor's 500 Index <.SPX> declined 8.88 points, or 0.81 percent, to 1,087.68, and the Nasdaq Composite Index <.IXIC> dropped 16.49 points, or 0.76 percent, to 2,156.80.
Bank of America and General Electric each fell more than 4 percent, to $17.26 and $16.08, respectively.
Europe's FTSEurofirst index declined 0.75 percent to 1,009.62. Earlier, in Japan, the Nikkei 225 Index <.N225> rose 0.18 percent to 10,257.56.
While the MSCI world equity index <.MIWD00000PUS> slipped about 0.9 percent on the day, stocks are near 12-month highs set in the previous trading session, and investors remained relatively upbeat on prospects for quarterly profits.
Through Thursday, Thomson Reuters Proprietary Research shows that of around 10 percent of S&P 500 index companies that have reported, 82 percent have beaten expectations. Google, IBM and Goldman Sachs Group Inc. results continued a trend of beating analysts' forecasts.
The global equity index is up 73 percent since touching a six-year trough in March, although still 7 percent below its level before Lehman Brothers collapsed last September.
But as a reminder of a fragile economic recovery, U.S. consumer confidence fell unexpectedly this month on concerns over the state of personal finances. The figures overshadowed an earlier report on surprisingly strong U.S. industrial production in September, up for the third consecutive month.
"Investors are having a logical debate right now, which is, What is the recovery going to look like and what is its effect on corporate profits?" said Bruce Zaro, chief technical strategist at Delta Global Advisors in Boston.
GREENBACK CLIMBS
The U.S. dollar index, which tends to rise as risk appetite dips, climbed <.DXY> 0.19 percent to 75.621.
"There's been a decent move (down) over the week (for the dollar), and ahead of the weekend you have to ask yourself, 'Are they (investors) going to push it much more?' Unlikely," said Paul Mackel, senior currency strategist at HSBC in London.
"Equities are looking a bit shaky, and it's the end of the week. So put the two together and the dollar is biased to the upside," he added.
The euro
U.S. Treasury debt prices rose on Friday as stock market losses underpinned demand for safe-haven U.S. government debt and data offered a tentative outlook for an economic recovery.
Benchmark 10-year U.S. Treasury notes