By Polya Lesova and Nick Godt, MarketWatch
NEW YORK (MarketWatch) -- U.S. stock futures turned lower on Friday after the Labor Department reported a bigger-than-expected drop in payrolls in July, rekindling concerns about the economy.
The U.S. economy shed 131,000 jobs last month, while the unemployment rate held steady at 9.5%.
Futures for the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 10,542, -133.35, -1.25%) fell 37 points, or 0.4%, to 10,598. They traded higher ahead of the release of the jobs report and briefly slumped as low as 10,557 after it.
Futures for the S&P 500 index /quotes/comstock/21z!i1:in\x (SPX 1,111, -15.25, -1.35%) fell 8.20, or 0.8%, to 1,115.30 while those for the Nasdaq 100 dropped 14.25, or 0.8%, to 1,886.75.
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Adding to the weak picture in the jobs report, private sector payrolls rose by an estimated 71,000 in July, weaker than the 100,000 increase expected by Wall Street economists surveyed by MarketWatch.
The report will likely "increase pressure on Fed policymakers to step on the monetary gas pedal at next week's meeting, or at least signal an easing bias," said Sal Guatieri, a senior economist at BMO Capital Markets.
On the corporate front, American International Group Inc. /quotes/comstock/13*!aig/quotes/nls/aig (AIG 40.40, +0.50, +1.25%) reported second-quarter adjusted earnings of $1.99 a share compared to $1.71 a share in the same period a year ago. Analysts, on average, were looking for a profit of 98 cents a share, according to a survey by FactSet Research. Shares of AIG were up 3% in recent premarket trade.
Berkshire Hathaway Inc. /quotes/comstock/13*!brk.a/quotes/nls/brk.a (BRK.A 118,703, -2,682, -2.21%) will release its results after the market closes.
U.S. stocks ended marginally lower Thursday, with the Dow /quotes/comstock/10w!i:dji/delayed (DJIA 10,542, -133.35, -1.25%) edging down 0.05% and the S&P 500 index /quotes/comstock/21z!i1:in\x (SPX 1,111, -15.25, -1.35%) dropping 0.1%.
RBS, Allianz report results
The Europe Stoxx 600 index /quotes/comstock/22c!sxxp (ST:SXXP 258.72, -2.76, -1.06%) gained 0.7% in afternoon trading. Investors digested several reports from European banking and insurance groups.
Royal Bank of Scotland Group PLC /quotes/comstock/13*!rbs/quotes/nls/rbs (RBS 16.34, -0.20, -1.21%) /quotes/comstock/23s!a:rbs (UK:RBS 51.10, -0.90, -1.73%) , the U.K. bank that's 83%-owned by the government, said it returned to profit in the second quarter. Shares of RBS advanced 2.1% in London trading. Read more about RBS results.
German insurance firm Allianz SE /quotes/comstock/11e!falv (DE:ALV 90.20, -0.05, -0.06%) reported a 46% drop in second-quarter net profit, but its operating profit rose 23% to 2.19 billion euros. The company's shares gained 1.2% in Frankfurt.
In Belgium, shares of banking group Dexia SA /quotes/comstock/24s!e:dexb (BE:DEXB 3.78, -0.19, -4.67%) slipped after it reported a decline in quarterly net profit.
On the economic front, Italy's gross domestic product expanded by 0.4% in the second quarter compared to the first three months of the year, meeting forecasts, preliminary data showed. GDP grew by 1.1% year on year, slightly short of expectations.
The euro /quotes/comstock/21o!x:seurusd (EURUSD 1.3282, +0.0097, +0.7357%) edged down to $1.3171, as a report showed that German industrial output unexpectedly declined in June. Read more about Germany's economic data.
The dollar index /quotes/comstock/11j!i:dxy0 (DXY 80.34, -0.49, -0.60%) , which tracks the performance of the greenback against a basket of other major currencies, was little changed at 80.36.
In the commodity markets, September oil futures dipped 61 cents to $81.40 a barrel in electronic trading on Globex. Gold futures rose $11.70 to $1,211.20 an ounce.
On the Chicago Board of Trade, September wheat futures gained 10 cents, or 1.4%, to $7.96 a bushel. The contract rallied in the previous session after Russia imposed a temporary ban on its grain exports amid a devastating drought. Read more about wheat's rally.
Polya Lesova is a reporter for MarketWatch, based in Frankfurt. Nick Godt is MarketWatch's markets editor, based in New York.
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