Source: Central Bank and Financial Services Authority of Ireland

In New York Thursday, weak economic data on growth and jobs spooked investors after a two-day rally.

The Dow Jones Industrial Average, which jumped more than 450 points over the previous two days, fell 205.67 points, or 1.8%, on Thursday. The index closed July up 0.2%, its first monthly advance since April.

Gross domestic product grew at a seasonally adjusted 1.9% annual rate April through June, the US Bureau of Economic Analysis  Commerce Department said Thursday in the first estimate of second-quarter GDP. The increase below expectations on Wall Street. Businesses reduced inventories sharply, putting a big drag on GDP, suggesting smaller cuts in production in future.

Price inflation indicators were mixed in the second quarter. The key price index for personal consumption expenditures rose by 4.2% after increasing 3.6% in the first quarter. The PCE price indicator excluding food and energy grew 2.1%, after increasing 2.3% in the first quarter.

GDP growth in the first quarter was revised down to a 0.9% rate of increase, compared to a previously reported 1.0% rate of increase. Revised data shows that GDP shrank 0.2% in the fourth quarter of 2007.

Finfacts Report:US GDP increased at an annual rate of 1.9% in the second quarter of 2008 boosted by exports and the tax rebates provided by the Economic Stimulus Act

The US Labor Department said on Thursday that some of the rise in weekly jobless claims related to a recent extension for up to 13 weeks of federal unemployment benefits. Some applicants for that extension actually discovered that they were eligible for new jobless benefits, a Labor Department analyst said.

September crude-oil futures dropped $2.69, or 2.1%, to $124.08 a barrel in New York in response to recession fears. Oil closed down 11.4% in July, ending a run of three straight monthly gains. The fall in July was the biggest in percentage terms in the 25-year history of crude-futures trading on the New York Mercantile Exchange.

The S&P 500 closed down 1.3% at 1267.38, off 1% on the month. The Nasdaq Composite Index closed down 0.2% and up 1.4% on the month.

Former Federal Reserve Chairman Alan Greenspan said the US is “nowhere near the bottom” of the housing slump and is “right on the brink” of a recession.

In an exclusive interview on CNBC, Greenspan said the US economy is holding up “rather well” considering the “extraordinary pressures from the financial sector.” But he added that a recession appears inevitable.

“I think we’re right on the brink,”he said. “I’d be more surprised if we didn’t than if we did, given the financial state.”

CNBC Video

Rossa White, Davy economist,  said today that US jobless claims suggest that the economy may have entered recession in H2:

US jobless claims spiked last week, suggesting that the economy may have entered recession in H2. The key 400,000 level was breached again two weeks ago, but last week's figures blew through it. The level of claims is consistent with the early 1990/1991 recession, albeit the labour force is much bigger now than then.

The latest unemployment claimant data surprised the market. Consensus was looking for a number just below 400,000, yet the total hit a massive 448,000. The last time we had a figure this high entering (rather than emerging from) a recession was in November 1990. In the 2001 shallow recession, numbers only got this high when the economy was actually emerging from the downturn after September 11th.

However, jobless claims are typically a reliable coincident indicator rather than a lagging one. If that holds true this time around, the economy has taken a sharp turn for the worse in the last month or so. That is consistent with a fading tax rebate stimulus, rising market interest rates and, most importantly, further tightening of credit availability. We now think the probability of US recession in H2 is above 50%, which means that credit losses from real economic activity will increase.

Bloomberg reports that China is restricting approvals for share sales to arrest a decline in the world's worst-performing major stock market, two people familiar with the matter said.

The China Securities Regulatory Commission is delaying the issuance of written approval documents, the final regulatory stage, to companies preparing initial public offerings, said the people. They declined to be identified because they aren't authorized to speak publicly on the matter.

Bloomberg says the market has plunged 48% this year, making the CSI 300 Index the worst performer among the 20 biggest benchmarks.

Japanese electronics giant NEC fell the most since the 1987 stock market crash after profit fell on lower orders for network equipment.

NEC plunged 17% to close at ¥495 yen on the Tokyo Stock Exchange, the biggest tumble since Oct. 23, 1987. Results

Japan's Nikkei 225 fell 2.11%; China's CSI 300 rose 1.41%; Australia declined 1.47% and India's BSE Sensex 30 Index dropped 0.41%.

Asia-Pacific - benchmarks.

German car group BMW (Bayerische Motoren Werke AG), reported second-quarter earnings lower than analysts' estimates and attributed to falling US sales, the dollar's decline and rising costs for raw materials and oil.

Net income fell to €507 million in the second quarter from €753 million earlier, the company said in a report today. Sales fell to €14.6 billion from €14.7 billion.

BMW's shares fell almost 10% in Frankfurt. Detail.

Most European markets are trading down Friday.

Irish drugs firm Elan has plunged 65% in Dublin after a report taht two patienst contracted the a brain diseas eside effect of the drug and the ISEQ Index has fallen almost 8%.

Irish Share Prices

Davy analyst Jack Gorman said today that Biogen Idec and Elan last night (July 31st) announced that two new PML cases have been confirmed:

The first case was confirmed on July 30th in the EU. The patient was 17 months on Tysabri and was not on prior MS therapy. The patient has been treated with plasma exchange and is currently stable and at home.

The second case was confirmed on July 31st, also in the EU. This patient had been on Tysabri for 14 months. In this case, the patient has had a history of other MS therapies and azathriopine. This patient is currently hospitalised.

This is a huge blow to Tysabri. Although the risk management programme seems to have picked them up quickly – which is good, the impact on neurologist take-up puts our forecasts at serious risk.

Biogen and Elan have maintained since the re-launch of Tysabri that further PML cases would not be a surprise given that the risk of PML is labelled at 1 in 1000. There are currently more than 31,800 patients using Tysabri, 14,000 of which have been on the drug for more than one year, with 6,500 taking it for 18 months or longer. In this context, the two newly-identified patients are within the labelled PML risk rate.

The near-term fate of patients, and whether plasma exchange can work, will be vital in the short term.

Our valuation is now under review. The lower end of our $27-32 range was SOTP based, splitting roughly $16.50 Alzheimer's, $8.50 Tysabri and the balance attributed to EDT/other.

Given the week so far for Elan, the market – as a knee-jerk reaction – may be unforgiving on its valuation of Tysabri. As evidence of this, the stock was down 42% in overnight trading.