TOPWRAP 5-Dour company, consumer views cast recovery doubt

* U.S. consumers turn gloomier on economic worries

* British GDP shrinks faster than expected

* Ericsson, Microsoft, Schlumberger outlooks downbeat (Updates market action, changes dateline, previous London/New York)

By Richard Leong

NEW YORK, July 24 (Reuters) - A batch of downbeat U.S. company outlooks and a darkening in consumers' mood cast doubt on Friday over a snappy global second-half recovery despite signs of economic stabilization in Europe.

The Reuters/University of Michigan said U.S. consumer confidence, a predictor of future household spending, fell to 66.0 in late July from 70.8 in late June. See [ID:nN24457947].

The closely-watched gauge fell for the first time since February, as Americans' concern about a tough labor market deepened. Consumer spending accounts for nearly 70 percent of the world's biggest economy.

Unemployment in many countries is expected to rise well into 2010, as companies continue to slash costs to retain meager profits in a weak business climate.

Major global companies -- Ericsson (ERICb.ST), Microsoft (MSFT.O) and Schlumberger (SLB.N) -- rang warnings of tough times ahead after reporting quarterly results on Thursday and Friday.

Britain is among the major economies struggling to emerge from recession though spending billions to renew growth. Data showed it posted its biggest annual decline on record in the second quarter. [ID:nLO44167]

These stark reminders that the world is mired in the worst global financial crisis in 80 years triggered selling in many stock markets on Friday, though U.S. blue chips managed to maintain a spirited rally.

"It's kind of a disappointment all around," said Daniel North, chief economist at Euler Hermes ACI in Owings Mills, Maryland. "It puts into question the issue of a recovery."

Still, recent data on balance signaled a recovery, albeit a lethargic one, is on the horizon, North added. "When you look at the trend recently, we are very much in the recovery despite the setbacks today in the data," he said.

SLUMP NOT OVER

Friday's Euro zone services and manufacturing sectors contracted much less sharply than expected in July, but sustained job cutting will subdue any recovery, key surveys showed.

Germany, individually, showed an improvement in services and manufacturing, and a key business sentiment index rose for the fourth month running in July to reach its highest level since October 2008.

"Today's figures are welcome but, fundamentally, still indicate that the euro area is firmly in recession," said Colin Ellis, European economist with Daiwa Securities.

Analysts cautioned improvement in German manufacturing and service industries owe more to rebuilding inventory and bargain pricing to boost sales than a rebound in demand.

Those concerns were supported by British data showing that the economy shrank 5.6 percent in second quarter from a year ago, worse than analysts and Bank of England had predicted.

"Today's figures are fresh evidence of the sheer scale of the global downturn we're fighting," Britain's junior finance minister, Liam Byrne, said.

Other data across the euro zone reinforced the notion the region's economy is contracting but at a slower pace.

The downturn in French private sector activity deepened in July, while Spanish second-quarter unemployment rose to its highest level in more than a decade.

Austria's central bank said the economy would shrink 4 percent in the second and third quarters compared with the same periods last year.

MORE HELP LIKELY NEEDED

To stave off further deterioration, finance authorities worldwide will likely pump more cash into their economies and keep interest rates at rock-bottom levels to restore growth, analysts said.

While government stimulus measures have helped some companies beat forecasts for second-quarter earnings, inspiring a stock market rally the last two weeks, analysts warned the rally may not last because the economic outlook remains mixed.

"We're due for a pause, which would be healthy if we want to keep the upside trend" in stocks, said Alexandre Le Drogoff, technical analyst at Aurel BGC.

Wall Street ended modestly lower on Friday with the Dow Jones Industrials .DJI staying above the 9,000 mark by rising 25 points to 9,094. The Dow broke 9,000 for the first time since January [ID.nN24465154] on Thursday.

The FTSEurofirst 300 index of top European shares .FTEU3 ended down 0.76 percent, after gains in Asia helped by a strong quarterly results from electronics giant Samsung (005930.KS).

(Reporting by Reuters correspondents worldwide, editing by Philip Barbara)