* Markets eye possible Greece deal in coming days
* Goldman shares tumble on U.S. criminal probe
* Lower-than-expected US GDP pours cold water on stocks
* Gold prices hit year's highs
(Updates to U.S. stocks close)
By Walter Brandimarte
NEW YORK, April 30 (Reuters) - U.S. and European stocks
fell on Friday as news of a criminal investigation into Goldman
Sachs weighed on bank shares, while the euro rose broadly on
hopes Greece may secure financial aid in the next few days.
Slower-than-expected U.S. economic growth in the first
quarter added to investor caution, although other data released
later signaled vigor in the economic recovery, sending oil
prices higher. For details, see [].
Treasury prices rose as stock losses triggered safe-haven
buying and some investors preferred to take risk off the table
on the last day of the month.
Shares of Goldman Sachs Group Inc <GS.N> plunged 9.39
percent on news U.S. federal prosecutors are investigating the
Wall Street powerhouse, raising the possibility of criminal
charges against the bank or its employees. [].
The Goldman news, combined to concerns about the chipmaker
sector and lingering anxiety about Greece, caused major U.S.
stock indexes to post their worst weekly performance since late
January.
"You're seeing selling across the board from portfolio
managers looking to reduce risk, based on the negative market
implications of further damage to Goldman Sachs' reputation,"
said Michael James, senior trader at Wedbush Morgan in Los
Angeles.
Investors also feared the Goldman news could result in
stronger calls for financial regulation just as the U.S. Senate
debated the theme for the second day.
The S&P financial index <.GSPF> lost 2.47 percent.
The Dow Jones industrial average <> ended lower 158.71
points, or 1.42 percent, at 11,008.61, while the Standard &
Poor's 500 Index <.SPX> dropped 20.09 points, or 1.66 percent,
to 1,186.69. The Nasdaq Composite Index <> fell 50.73
points, or 2.02 percent, to 2,461.19.
During the week, the Dow fell 1.2 percent and the S&P 500
slipped 1.5 percent, while the Nasdaq slumped 2.6 percent.
Technology stocks fell sharply, with the PHLX semiconductor
index <.SOXX> down 4.54 percent after South Korea's Samsung
said inventory could grow in the second half of the year.
In Europe, stocks closed lower for a third straight week.
The FTSEurofirst 300 <> index of top European shares fell
0.72 percent, pressured by banks and oil companies.
Shares of BP <BP.L> dropped 1.49 percent, extending a fall
of recent days as worries intensified about an oil spill from
one of the firm's wells in the Gulf of Mexico.
Barclays <BARC.L> closed down 6.4 percent after results
from its investment banking arm, Barclays Capital, disappointed
with revenue growth failed to match the lofty levels reported
by many rivals.
For the week, the pan-European benchmark index lost 2.7
percent, and was down 1.5 percent in the month of April. The
index is still up more than 64 percent from a lifetime low hit
on March 9, 2009.
World stocks measured by the MSCI All-Country World Index
<.MIWD00000PUS> fell 0.62 percent, as gains of 0.59 percent in
emerging-market stocks <.MSCIEF> cushioned the fall in
developed countries.
GREECE HOPES
The euro extended recent gains against the dollar, as
expectations Greece will soon receive emergency aid helped to
quiet jitters over how Athens will pay its debts.
The European single currency <EUR=> was up 0.64 percent at
$1.3309. Still, the euro is down more than 1 percent in April,
its fifth straight month of declines.
"The next week is really a very decisive week for the euro
zone as well as for Europe as a whole," said Tammo Greetfeld,
equity strategist at UniCredit in Munich.
Details of Greece's aid package are expected to be
announced by Monday, sources familiar to the issue said. But
investors remained cautious, awaiting details on the plan and
the reaction in Athens, where angry unions were readying
strikes to protest against severe austerity measures.
[]
The anxiety about Greece's debt negotiations, combined with
U.S. stock losses, fed steady safe-haven demand for U.S.
Treasuries.
The benchmark 10-year note <US10YT=RR> rose 18/32 in price,
with the yield at 3.6628 percent. The 30-year bond <US30YT=RR>
climbed 35/32, with the yield at 4.5257 percent.
"We are seeing stocks getting hit, and we still have fears
about Greece," said Thomas Roth, executive director in U.S.
government bond trading at Mitsubishi UFJ Securities USA in New
York.
The dollar erased gains against the yen <JPY=>, trading
down 0.04 percent at 93.97 yen, as the U.S. stock market
declined.
U.S. crude oil futures rose 98 cents to $86.15 a barrel as
data provided more signs of economic recovery. April was the
first month since September 2008 when the front-month contract
has traded continuously above $80 a barrel.
U.S. GDP growth in the first quarter came in at a 3.2
percent annual rate, lagging projections for growth of 3.4
percent, but consumer spending rose, signaling a sustainable
recovery is taking hold.
A separate report showing that business activity in the
U.S. Midwest expanded more than expected in April added a
positive tone on the economy.
Gold prices reached their highest level this year, trading
above $1,180 an ounce <XAU=> during the session on a safe-haven
alternative amid European debt worries.
For a graph on U.S. GDP: http://link.reuters.com/qur22k
Consumer sentiment: http://link.reuters.com/zet22k
(Additional reporting by Rodrigo Campos in New York; Editing
by Andrew Hay)
