French President Francois Hollande said Friday he would carry out his pledge to withdraw combat forces from Afghanistan by year's end, two years earlier than the U.S. ally once planned. He made the declaration to President Barack Obama in the Oval Office.

It's Facebook's big day.

NEW YORK (Reuters) - Stocks fell on Friday, with the NYSE composite stock index turning negative for the year as Facebook Inc stumbled in its market debut and investors were cautious ahead of a G8 summit on the weekend expected to address Europe's debt crisis. The Dow Jones industrial average dropped 61.61 points, or 0.50 percent, to 12,380.88. The Standard & Poor's 500 Index fell 6.90 points, or 0.53 percent, to 1,297.96. The Nasdaq Composite lost 20.81 points, or 0.74 percent, to 2,792.88. (Reporting By Edward Krudy, editing by Dave Zimmerman)

Germany's chancellor apparently waded into Greece's choppy political waters on Friday, with Athens saying Angela Merkel suggested that the country should hold a referendum on the euro together with next month's national elections.

Facebook is trading up 8 percent Friday, as investors seek to put a dollar value on the company that turned online social networking into a global cultural phenomenon.

It's going to take more than Facebook's initial public offering to push the stock market higher.

Chaos in Greek politics and Spanish banking combined this week to underscore just how fragile Europe's economy remains after an eviscerating austerity regime that has spawned unemployment, desperation and misery. And there is no respite in sight, as Germany's finance minister predicted Friday that the crisis could last up to another two years.

Chaos in Greek politics and Spanish banking combined this week to underscore just how fragile Europe's economy remains after an eviscerating austerity regime that has spawned unemployment, desperation and misery. And there is no respite in sight, as Germany's finance minister predicted Friday that the crisis could last up to another two years.

WASHINGTON (Reuters) - The Pentagon said on Friday it believes China spent up to $180 billion on its military buildup last year, a far higher figure than acknowledged by Beijing, and it accused "Chinese actors" of being the world's biggest perpetrators of economic espionage. The Pentagon, in its annual report to Congress on China's military, flagged sustained investment last year in advanced missile technologies and cyber warfare capabilities and warned that Chinese spying threatened America's economic security. ...

MOSCOW (Reuters) - President Vladimir Putin will likely name allies to key economic posts when he unveils his new cabinet on Monday, asserting control over the government in a move that could hamstring reforms backed by his more liberal premier. At stake is the future of Russia's privatization program and the drive to diversify a $1.7 trillion Russian economy still heavily dependent on oil and gas exports, which yield half of all state revenues. "It will be Putin's cabinet," said Lilia Shevtsova, a senior associate at the Carnegie Moscow Center think-tank who is an author and expert on Putin. ...

SAN FRANCISCO (Reuters) - Facebook Inc shares rose less than expected on their first day of trade on Friday and huge order volume caused technical problems that marred the coming out party of the No. 1 online social network. Its shares were up 8 percent in early afternoon trading on the Nasdaq, after opening 11 percent higher and then rapidly heading south to touch their initial public offering price of $38. The gains were below market forecasts of as much as a 50 percent jump. ...

WEEKEND MEETING: Leaders of eight of the world's biggest economies meet this weekend outside Washington, seeking to keep Europe's debt crisis from spiraling out of control.

(Reuters) - Kraft Foods said on Friday it lowered prices on many of its U.S. coffees, including its flagship brand Maxwell House and some of its instant coffees, citing lower green coffee costs since prices peaked last year. The move comes three days after trend-setter J.M. Smucker Co. cut the cost of well-known brands Folgers and Dunkin' Donuts by an average of 6 percent. It is the second cut to coffee prices since August 2011 for both companies. "These changes reflect sustained decreases in the cost of green coffee," Kraft spokeswoman Bridget MacConnell told Reuters in an email. ...

CARACAS (Reuters) - Venezuela's President Hugo Chavez has not been seen or heard in public since returning a week ago from his latest cancer treatment in Cuba but was well enough to monitor a jail riot in Caracas, an ally said on Friday. The usually garrulous and attention-seeking Chavez's disappearances from public view have become longer and more frequent this year. That has fueled speculation his condition has worsened and may complicate a re-election bid in October. ...

NEW YORK, May 18 (Thomson Reuters Accelus) - A labor-backed investor group critical of JPMorgan Chase & Co's corporate governance said the bank has failed to address concerns over its risk oversight and it will try to rally other shareholders for changes after a $2 billion trading loss. CtW Investment Group, which advises labor pension funds holding what it said are 6 million shares in JPMorgan, has advocated for risk governance changes there for more than a year. ...

NEW YORK (Reuters) - World stocks erased the year's gains on Friday as investors fled risky investments for safe-haven assets on concerns about the euro zone's deepening debt woes, while U.S. stocks lost ground after the market debut of social network Facebook . Brent crude briefly slipped below $107 per barrel to its lowest in 2012 as the euro zone crisis raised fears of a global slowdown that could dent oil demand. The euro hovered near a four-month low, while benchmark 10-year German bond yields hit a record low. World stocks, as measured by the MSCI index , dropped 0. ...

BRUSSELS/LONDON (Reuters) - European officials are working on contingency plans in case Greece bombs out of the euro zone, the EU's trade commissioner said on Friday, while Berlin said it was prepared for all eventualities. German Finance Minister Wolfgang Schaeuble, one of Greece's harsher critics, said market turmoil fuelled by the euro zone debt crisis could last another year or two. "Regarding the crisis of confidence in the euro ... in 12 to 24 months we will see a calming of the financial markets," he said. ...

Greece's day-old Parliament held its last session Friday to allow for new elections next month that are being cast as a decision on whether to keep the country in the 17-nation eurozone — even if that means accepting a deeply unpopular austerity program.

TENSIONS EASED: Taiwan President Ma Ying-jeou has leveraged growing economic ties with China to reduce tensions to their lowest level since the two sides split in 1949.

President Joyce Banda declared Friday she wants to repeal Malawi's laws against homosexual acts, going against a trend in Africa in which gays are being increasingly singled out for prosecution.

Fitch ratings agency has downgraded five Greek banks, a day after giving the crisis-hit nation the lowest possible grade for a country that is not in default.

MILAN (Reuters) - Italian carmaker Fiat said 5,000 office workers at its Mirafiori factory will be laid off for three days in June and three days in July. Car sales in Italy fell 20 percent in the first three months of the year, and are in their fifth year of decline. "When we sell less, we produce less, and therefore our office staff also works less as a consequence," a spokesman said on Friday. Manufacturing workers at Mirafiori in Turin, where Fiat has its executive headquarters, have already been laid off temporarily. ...

BEIRUT (Reuters) - Forces loyal to Syrian President Bashar al-Assad shot two protesters in the capital Damascus on Friday and fired in the air to break up thousands of anti-government demonstrators in the commercial hub of Aleppo, activists said. It was the second consecutive day of street protests in Aleppo, Syria's largest city, where a visit by U.N. ceasefire monitors a day earlier saw demonstrators mass outside the gates of the Aleppo University before security forces drove them off. ...

British officials have given their word: "We won't read your emails."

PARIS (Reuters) - French luxury giant LVMH is struggling to retain its image as exclusive and high-end creators of $10,000 alligator handbags and goat-lined fur coats, while opening enough stores and reaching enough customers to keep profits high. Thus far LVMH has managed the balance well, but it is taking no chances, offering customers increasingly expensive and bespoke services in an effort to retain a high-end mystique around brands in danger of becoming ubiquitous. ...

Syrian security forces fired tear gas and live ammunition to disperse thousands rallying Friday in Aleppo in what activists said was the largest protest yet in a city that has largely remained loyal to President Bashar Assad during the country's 15-month uprising.

FRANKFURT (Reuters) - German police said they detained 400 anti-capitalist protesters in Frankfurt on Friday for defying a ban on demonstrations against austerity policies implemented to tackle the intensifying euro zone debt crisis. The demonstration in the German financial capital was part of a four-day-long "Blockupy" protest, due to run until Saturday, against capitalism and swingeing austerity measures. "Hungry? Eat a banker," read one banner protesters held up outside the Messeturm skyscraper housing Goldman Sachs' offices. Reuters' Frankfurt office is also in the building. ...

MADRID (Reuters) - Spanish banks' bad loans rose in March to their highest in 18 years, underscoring the problems facing the government as it drafts in independent auditors in an attempt to reassure investors it can clean up the sector. The Bank of Spain said bad loans rose to 8.37 percent of banks' outstanding loans, the highest since August 1994 and up from 8.3 percent in February, which was also revised higher. The data was released before Spain names auditors on Monday to assess how bad the losses are likely to get, and how much cash banks will need to rebuild their balance sheets. ...

MADRID (Reuters) - Spanish banks' bad loans rose in March to their highest in 18 years, underscoring the problems facing the government as it drafts in independent auditors in an attempt to reassure investors it can clean up the sector. The Bank of Spain said bad loans rose to 8.37 percent of banks' outstanding loans, the highest since August 1994 and up from 8.3 percent in February, which was also revised higher. The data was released before Spain names auditors on Monday to assess how bad the losses are likely to get, and how much cash banks will need to rebuild their balance sheets. ...

President Vladimir Putin on Friday gave a senior government post to a tank factory worker who had offered to come to Moscow with fellow laborers to disperse opposition protests.

BRUSSELS (Reuters) - The European Commission and the European Central Bank are working on scenarios in case Greece has to leave the euro zone, EU trade commissioner Karel De Gucht has said. Speculation about such planning has been rife, but the comments in a newspaper interview, confirmed by a person close to De Gucht, appear to be the first time an EU official has acknowledged the existence of contingency plans being drawn up in case Greece has to drop out of the currency bloc. ...

ATHENS (Reuters) - Greek voters are returning to the establishment parties that negotiated its bailout, a poll showed on Thursday, offering potential salvation for European leaders who say a snap Greek election next month will decide whether it must quit the euro. The poll, the first conducted since talks to form a government collapsed and a new election was called for June 17, showed the conservative New Democracy party in first place, several points ahead of the radical leftist SYRIZA which has pledged to tear up the bailout. ...

MUNICH (Reuters) - Premium carmaker BMW is considering new production sites around the world, with one option being Mexico, a person familiar with the situation told Reuters on Friday. German daily Handelsblatt earlier cited company sources as saying BMW was examining whether to build plants in Mexico and eastern Europe. It said Slovakia's Kosice and Hungary's Miskolc were possible candidates. BMW declined to comment. Earlier this month, it denied reports it plans to build an assembly plant in Slovakia. ...

VIENNA (Reuters) - Iran and the U.N. nuclear watchdog are making headway towards a framework deal on how to tackle concerns about its atomic activity, diplomats say, a potential bargaining chip for Tehran in next week's negotiations with world powers. Iran says such an agreement is needed before it can consider a request by U.N. inspectors to visit the Parchin military site where they believe explosives tests relevant for developing nuclear weapons may have been carried out. ...

WASHINGTON (Reuters) - JPMorgan Chase & Co Chief Executive Jamie Dimon has agreed to testify before Congress over the bank's recent trading losses, which have ignited a political debate over whether large U.S. banks need to be reined in by regulators or new laws. U.S. Senate Banking Committee Chairman Tim Johnson said in a statement on Thursday that his panel will invite Dimon to appear before Congress. ...

The level of bad loans on the books of Spain's banks has risen to an 18-year high, the country's central banker reported Friday, increasing concern for the stability of Spain's financial sector and the country's place in the fragile eurozone economy.

WASHINGTON (Reuters) - Leaders of major industrial economies meet this weekend to try to tackle a full-blown crisis in Europe where fears are growing that Greece could leave the euro zone bloc, threatening the future of the common currency. President Barack Obama, the G8 host, has urged European leaders repeatedly to do more to stimulate growth, fearing contagion from the euro crisis that could hurt the U.S. economy and his chances of re-election in November. ...

PARIS (Reuters) - Market turmoil over the euro zone crisis could last another 12 to 24 months, German Finance Minister Wolfgang Schaeuble said on Friday, saying it was up to the Greeks to decide if they wanted to stay in the single currency. Schaeuble said he was confident France's new Socialist government would ratify Europe fiscal pact because policymakers were working on a strategy to improve growth, as demanded by French President Francois Hollande. "Regarding the crisis of confidence in the euro ... ...

QINGDAO, China (Reuters) - When metals warehouses in top consumer China are so full that workers start stockpiling iron ore in granaries and copper in car parks, you know the global economy could be in trouble. At Qingdao Port, home to one of China's largest iron ore terminals, hundreds of mounds of iron ore, each as tall as a three-storey building, spill over into an area signposted "grains storage" and almost to the street. ...

Peruvians traumatized by years of guerrilla violence cheered in 1997 when government troops raided the Japanese ambassador's residence to rescue hostages held for 126 days by leftist rebels.

BEIJING (Reuters) - China's annual economic growth could slow to 7.5 percent in the second quarter, largely due to curbs on the property sector and headwinds from external demand, the State Information Center, a government think-tank, said in a report published on Friday. If the GDP forecast is accurate, growth in the second three months of 2012 would be the slowest since the first quarter of 2009, when the global economy was in the grip of the worst financial crisis since the Great Depression. The forecast is in line with the government's official 2012 growth target of 7. ...

MADRID (Reuters) - The Spanish government has hired Goldman Sachs to carry out an independent valuation of Bankia , the ailing bank taken over by the state last week, Spanish newspaper Expansion said on Friday. The U.S. bank will review Bankia's and its parent company BFA's books and determine within a month how much the state should inject to refloat the lender, which had to be rescued after its auditor, Deloitte, identified several gaps in last year's accounts. ...