* Dow, SP500, Nasdaq drop sharply * GE, McDonald's results clip recent Wall Street rally * Euro eases after U.S. home resales fall, oil prices down * Gold also falls, hurt by slide in U.S. stock prices By Herbert Lash NEW YORK, Oct 19 (Reuters) - World stocks and crude oil fell on Friday as investors took a dim view of U.S. corporate earnings after General Electric and McDonald's disappointed, while Europe's debt crisis and ongoing concerns about global growth also weighed on sentiment. The dollar climbed against the euro and the yen as a perceived lack of progress on a Spanish bailout request reminded investors of the headwinds facing the world economy. Gold fell more than 1 percent, its biggest one-day slide in more than three months, as bullion was hit by technical selling and the decline on Wall Street, which erased most of the week's gains. The CBOE Volatility Index, the so-called fear gauge, jumped 13.5 percent to 17.06, its highest level since Sept. 5. The stock market sell-off occurred on the 25th anniversary of the Black Monday crash of 1987, when the Dow plummeted 22.6 percent - its worst single-day percentage loss ever. "This sell-off is definitely earnings-driven but there is also an element of profit taking after several strong days," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York. Revenue missed analysts' expectations at GE due to unfavorable exchange rates, while McDonald's profits also missed expectations because of the weak global economy. GE fell 3.4 percent to $22.03 and McDonald's slid 4.5 percent to $88.72. Of the 116 S&P 500 companies that have reported so far in the U.S. earnings season, 60 percent have exceeded analysts' estimates, a rate lower than the 67 percent pace of the previous four quarters, according to Thomson Reuters data. The Dow Jones industrial average was down 205.43 points, or 1.52 percent, at 13,343.51. The Standard & Poor's 500 Index was down 24.15 points, or 1.66 percent, at 1,433.19. The Nasdaq Composite Index was down 67.24 points, or 2.19 percent, at 3,005.62. "We've had a nice run up and you start seeing these earnings miss. It may be time to take some money off the table," said Larry Peruzzi, senior equity trader at Cabrera Capital Markets Inc in Boston. European shares snapped a four-day winning streak as signs of disagreement among European Union leaders over how to help the region's debt-ridden banks hit financial stocks. Equities in Europe might be prone to a bigger fall because of the perceived lack of progress in finding long-lasting solutions to the euro zone debt crisis, said Luc Bocahut, a portfolio manager at Monaco-based Tiverton Trading. "I would be quite bearish here. They really haven't made much progress," Bocahut said. U.S. stocks extended their slide to more than 1.5 percent as earnings from large multinationals underscored the effect of the global economic slowdown. MSCI's all-country world equity index was down 1.3 percent at 333.96. In Europe, the FTSEurofirst 300 index of leading regional companies closed down 0.8 percent at 1,111.85, while the pan-regional Euro STOXX 50 closed down 1.24 percent at 2,542.24. The euro slipped against the dollar as a perceived lack of progress on a Spanish bailout request curbed demand. Risk appetite also eased on a report showing U.S. home resales fell in September, a reminder that America's housing sector is a long way from a full recovery. The euro was last down 0.3 percent at $1.3021, close to a session low of $1.3018. U.S. Treasury prices edged up as selling pressure that has hurt the market the past four days subsided. Recent stronger U.S. economic data and hopes that European leaders are taking steps to resolve their debt crisis caused a dramatic jump in Treasuries yields this week amid heavy selling of the debt. The market is also pricing in an expectation that the U.S. Federal Reserve will start raising rates in 2014, instead of 2015, for the first time since Fed Chairman Ben Bernanke's speech in Jackson Hole in August, said Jim Vogel, interest rate strategist at FTN Financial in Memphis, Tennessee. "The question everyone is asking is 'Was QE3 even necessary?' given that we are already seeing evidence of a nice third-quarter rebound," he said. The benchmark 10-year U.S. Treasury note was up 18/32 to yield 1.7677 percent. Brent and U.S. crude futures fell more than 1 percent on concerns about the European debt crisis, a stronger dollar and the decline in equity markets. December Brent crude oil futures slid $2.28 to settle at $110.14 a barrel. U.S. crude settled down $2.05 at $90.05 a barrel. U.S. COMEX gold futures for December delivery settled down $20.70 an ounce at $1,724. Spot gold was down 1.2 percent at $1,720.80 an ounce.