Earnings worries weaken stocks, oil below $60

By Jeremy Gaunt, European Investment Correspondent

LONDON (Reuters) - Uncertainty on company earnings and economic recovery prospects hobbled shares on Friday, while the dollar rose against a basket of major currencies.

Oil dropped below $60 a barrel.

European shares opened lower with the FTSEurofirst 300 down 0.4 percent. Japanese's shares early closed a touch lower for the eighth consecutive day of declines.

A downbeat earnings outlook from oil major Chevron Corp after the Wall Street close on Thursday weighed on sentiment, flipping the boost gained on Thursday from aluminium giant Alcoa's better-than-forecast results.

With the summer holidays kicking off in the northern hemisphere and the second-quarter earnings season beginning, market and fund flows suggested many investors were heading to the sidelines, according to fund tracker EPFR Global said.

Stocks globally enjoyed a powerful rally in the second quarter but have since run out of steam.

"There is a lack of impulse, full stop," said Giuseppe-Guido Amato, strategist at brokerage Lang & Schwarz in Germany.

Chevron Corp said late on Thursday that second-quarter earnings would be hit by a sharp decline in U.S. refining margins, sending its shares down in extended trading.