European shares dropped 1 percent in morning trade, while the euro and oil also retreated, as expectations of a fresh round of global monetary policy easing dimmed and investors' focus swung back to Spain's banking crisis and the prospect of slower economic growth in Germany and China.

On the macro front, investors awaited U.S. international trade data, at 1230 GMT, as well as wholesale inventories, due at 1400 GMT.

German imports tumbled at their fastest rate in two years in April and exports fell more than expected, data showed on Friday, in another sign Europe's largest economy is beginning to feel the chill from the euro zone debt crisis.

An Apple Inc (AAPL.O) lawyer said the iPhone and iPad maker may seek a legal order stopping the launch of Samsung Electronics Co Ltd's (005930.KS) Galaxy S III phone in the United States later this month.

Best Buy Co Inc (BBY.N) founder and chairman Richard Schulze resigned from the retailer's board on Thursday and said he was exploring options for his 20.1 percent ownership stake, a move seen as a possible precursor of a Schulze-led private takeover.

About 100 workers at a southwestern China plant of Foxconn, Apple Inc's (AAPL.O) main manufacturer, went on the rampage this week after a dispute in a restaurant turned violent, a government website said.

TSMC (2330.TW), the world's biggest contract chip maker, said on Friday that sales in May rose 21 percent from a year earlier.

Britain's Rolls-Royce (RR.L) said it would buy out partner Goodrich Corp (GR.N) in its engine controls joint venture, gaining full ownership of its fuel pumps and metering units business.

The S&P 500 ended barely changed on Thursday as optimism about China's interest rate cut was offset by Federal Reserve Chairman Ben Bernanke's comments that dimmed hopes for more U.S. stimulus. Both the Dow industrials and the Nasdaq ended off session highs, with the Dow rising modestly for the day and the Nasdaq slipping.

The Dow Jones industrial average .DJI was up 0.37 percent, at 12,460.96. The Standard & Poor's 500 Index .SPX down 0.01 percent, at 1,314.99. The Nasdaq Composite Index .IXIC was down 0.5 percent, at 2,831.02.

(Reporting by Blaise Robinson; Editing by Hugh Lawson)

• A Permanent Economic Emergency