* Wall Street drops on economic pessimism
* Euro skids to three-week low of $1.2747
* Crude oil slips, spot gold edges higher
* German Q2 GDP beats estimates, rises 2.2 percent (Updates with U.S. market close, adds comment)
By Daniel Bases
NEW YORK, Aug 13 (Reuters) - U.S. and German economic data looked promising on Friday, but pessimism regarding the global economic recovery pushed the euro to a three-week low and led to Wall Street's worst week in a month and a half.
A slight rise in U.S. consumer confidence for early August, plus a small advance in retail sales and an increase in business inventories were not enough to sustain confidence in the U.S. economy. For more, see: [ID:nN13180040]
Tuesday's U.S. Federal Reserve decision to address a slowdown in the U.S. economic recovery by buying more Treasuries fueled doubts about the economic recovery and led to the sell-off in stocks that pushed the S&P 500 stock index down 3.8 percent for the week. [nFEDAHEAD].
"We've seen a succession of bad news this week that was punctuated by the Fed's comments, so while we have some semblance of self-sufficiency, it's clear we'll be in a slow-growth period for a long time," said Steven Baffico, senior managing director at Claymore Securities in Lisle, Illinois.
Germany's 2.2 percent second-quarter growth -- dwarfing forecasts of a 1.3 percent rise and marking its best quarter since before reunification -- sparked fears that the peak in a lackluster economic rebound had been reached. [ID:nLDE67C0YX]
French GDP growth also exceeded forecasts.[ID:nLDE67C0DK]
Crude oil prices slipped, while gold rose. The precious metal, however, was down from a one-month high reached earlier in the session.
A disappointing auction of Italian government bonds undermined peripheral euro zone debt prices, driving investors into benchmark German Bunds. [GVD/EUR]
At the close, the Dow Jones industrial average <.DJI> fell 16.80 points, or 0.16 percent, to 10,303.15. The Standard & Poor's 500 Index <.SPX> lost 4.36 points, or 0.40 percent, to 1,079.25. The Nasdaq Composite Index <.IXIC> dropped 16.79 points, or 0.77 percent, to 2,173.48.
Pressuring the Nasdaq, Google Inc
India may shut down Google's messaging services over security concerns, the Financial Times reported, and the government has threatened a similar crackdown on RIM's BlackBerry services. [ID:nSGE67C00W]
The pan-European FTSEurofirst 300 <.FTEU3> index of top shares rose 0.28 percent to 1,045.65.
However, Delhaize
"(European) volumes are pitiful," said Andy Lynch, fund manager at Schroders. "Price discovery is pretty limited. The next movement is probably down. The American recovery is still in doubt ... It's all rather depressing."
The MSCI world equity index <.MIWD00000PUS> and the Thomson Reuters global stock index <.TRXFLDGLPU> fell slightly.
EURO STUMBLES
The euro fell against the U.S. dollar, retreating from the highs fueled by Germany's upside economic surprise.
The euro dropped as low as $1.2747
"Subtle fears that the problems in Europe have not evaporated were highlighted well this week by the focus on the weaker-than-expected Italian bond auction," said Camilla Sutton, chief currency strategist at Scotia Capital in Toronto.
"Today's (data) releases were positive for the euro," Sutton said. "The inability to rally on good news is never a good sign."
For the week the dollar was on pace to record its best performance in almost two years against a basket of currencies of its major trading partners.<.DXY>.
Against the yen
U.S. Treasury bond yields fell on fresh safe-haven buying
after the U.S. data pointed to low growth and low inflation.
Benchmark 10-year Treasury yields dropped to 2.677 percent
September Bund futures
U.S. light sweet crude oil