* MSCI world equity falls for third straight day
* European shares bounce on ECB inflation revamp report
* Oil slumps as production pick up eyed (Updates with open of European markets)
By Chuck Mikolajczak
NEW YORK, July 18 (Reuters) - A gauge of global stocks lost ground for a third straight session on Thursday on worries over how the trade war between the United States and China could take a toll on corporate earnings, while oil prices dropped on expectations of rising output.
On Wall Street, shares of Netflix plunged 10.97% in the wake of its quarterly results as it missed targets for new subscribers overseas.
Honeywell, up 2.15%, helped curb losses as its results topped expectations and it raised its full-year outlook. However, the diversified manufacturer said it is planning "somewhat cautiously" for the second half due to volatile geopolitical and economic movements.
"The stock market seems to be running out of energy," said John Augustine, chief investment officer of Huntington Private Bank in Columbus, Ohio.
"Earnings have met expectations, but companies are being cautious about future quarters, which is something that's not able to keep the S&P 500 above the 3,000 level," Augustine said.
Earnings are now expected to show growth of 0.6% for the second quarter, according to Refinitiv data. S&P 500 companies were expected to show a decline as recently as Tuesday. The ratio of negative to positive earnings preannouncements is 3.8, above the 2.7 average since 1997 and the 1.9 for the prior four quarters.
U.S. and Chinese officials were scheduled to have a phone call later on Thursday on trade, U.S. Treasury Secretary Steven Mnuchin told CNBC.
The Dow Jones Industrial Average fell 80.95 points, or 0.3%, to 27,138.9, the S&P 500 lost 1.02 points, or 0.03%, to 2,983.4 and the Nasdaq Composite dropped 20.75 points, or 0.25%, to 8,164.46.
In Europe, stocks were initially weaker as disappointing earnings from software firm SAP pulled down its shares as much as 10%, dragging the technology sector with it, as it flagged the impact of the U.S.-China trade war.
But the Euro STOXX 600 managed to close of its lows on hopes of looser monetary policy from the European Central Bank policy.
The pan-European STOXX 600 index lost 0.22% and MSCI's gauge of stocks across the globe shed 0.22%.
In commodities, oil slumped more than 2% on an expectation that crude output would rise in the Gulf of Mexico following last week's hurricane in the region.
U.S. Treasury yields edged higher after economic data on manufacturing in the U.s. mid-Atlantic region rebounded, while weekly jobless claims showed the country's labor market remains strong.
Despite a flurry of strengthening economic data recently, market participants consider it a certainty the Federal Reserve will cut rates by at least a quarter of a percentage point at its July 30-31 meeting.
Benchmark 10-year notes last fell 2/32 in price to yield 2.0659%, from 2.061% late on Wednesday.
In currencies, the dollar slipped slightly in the wake of the data while the euro lost ground following the report on the European Central Bank that its staff is studying a potential change to its inflation goal. Sterling rose, in part after a vote by lawmakers to make it harder for Britain's next prime minister to try to force a no-deal Brexit.
The dollar index fell 0.07%, with the euro was up 0.01% to $1.1224. Sterling was last trading at $1.248, up 0.39% on the day.
Additional reporting by Medha Singh and Uday Sampath in Bengaluru; editing by Bernadette Baum and Jonathan Oatis