NEW YORK: US stocks dropped for the fourth straight day on Friday and European stocks mostly fell amid renewed fears about inflation and ebbing growth. Investor sentiment took a hit from news the UK economic recovery slowed sharply in July, growing by just 0.1 percent as rising Covid cases and supply shortages offset the end of lockdown curbs.

In the United States, government data showed producer price inflation (PPI) over the latest 12 months hit a record 8.3 percent in August. That unnerved markets, and all three major Wall Street indexes closed lower for the week.

"This is part of a recent trend downward in the market, probably fueled by the Delta variant and the potential for slowing," said Jack Ablin of Cresset Capital.

Ablin said the PPI spike "shows a fair amount of pricing pressure. And I think that caused some concern among investors," as it could push the Federal Reserve to tighten monetary policy sooner.

US consumer price index (CPI) data is due out next week, and Michael Hewson, chief market analyst at CMC Markets UK said, "It would be rather odd if some of these price rises didn't start to trickle down into the headline CPI rate."

London ended the day with a small gain of less than 0.1 percent, while Paris stocks shed 0.3 percent and Frankfurt gave up less than 0.1 percent.

News that leaders of the world's two biggest economies, US President Joe Biden and China's Xi Jinping, talked for the first time in seven months sent Asian stocks fizzing higher.

Oil prices also got a boost from the Biden-Xi talks, shooting up two percent.

However, that optimism may be premature: according to news reports, the White House is considering launching a trade investigation over Chinese industrial subsidies, which could lead to a new round of punitive tariffs.

The Wall Street Journal reported that the administration "wants it to be a full-court press," although no decisions have been made, citing a person familiar with the discussions.

Key figures

New York - Dow: DOWN 0.8 percent

New York - S&P 500: DOWN 0.8 percent

New York - Nasdaq: DOWN 0.9 percent

EURO STOXX 50: DOWN 0.2 percent

FTSE 100: UP less than 0.1 percent

Frankfurt - DOWN less than 0.1 percent

Paris - CAC 40: DOWN 0.3 percent

Tokyo - Nikkei 225: UP 1.3 percent

Hong Kong - UP 1.9 percent

Shanghai - Composite: UP 0.3 percent

Dollar/yen: UP at 109.93 yen

Pound/dollar: UP at $1.3839

Euro/dollar: DOWN at $1.1814

Euro/pound: DOWN at 85.34 pence

Brent North Sea crude: UP 2.0 percent

West Texas Intermediate: UP 2.3 percent.