PARIS, May 11 (Reuters) - European stocks were set to drop on Friday, resuming a two-week retreat as Greece's political deadlock, a huge loss from JPMorgan and a batch of lower-than expected earnings from bellwethers such as Telefonica and Credit Agricole rattle investors. The telecom major posted a 54 percent drop in quarterly net profit after the value of its stake in Telecom Italia plunged and prices fell in recession-hit Spain. The French bank, meanwhile, posted a steeper-than-expected 75 percent drop in quarterly profit, hit by 940 million euros ($1.22 billion) in Greece-related write-downs, the latest blow from its ill-fated Emporiki acquisition. At 0630 GMT, futures for Euro STOXX 50, for Germany's DAX and for France's CAC were down 0.7-0.9 percent. Greek Socialist leader Evangelos Venizelos is due to meet conservative Antonis Samaras on Friday in a last-ditch attempt to form a government and avoid a repeat election, while EU leaders are warning that Greece's membership of the euro is at stake. JPMorgan Chase & Co, the biggest U.S. bank by assets, said it suffered a trading loss of at least $2 billion from a failed hedging strategy, a shock disclosure that hit financial stocks and the reputation of the bank and its chief executive, Jamie Dimon. Spain will be in focus again as the country is due to unveil new reforms to complete the clean-up of its ailing banking sector on Friday after tough last-minute talks between the government and lenders. The euro zone's blue-chip Euro STOXX 50 index has dropped nearly 5 percent over the past two weeks, hitting a near five-month low on Wednesday as fears over the euro zone bank crisis resurfaced. "Without the formation of a solid support base, all rallies should be treated as short-covering. With an abundance of downside retracement zones still within striking distance, investors don't appear to be too anxious to buy yet, they seem to be more willing to wait for stocks to reach a solid value area," Autochartist analyst James Hyerczyk wrote in a note. "Shorts, on the other hand, seem to be content with pressing (stocks) lower while letting off the gas a little to trigger a less-than-meaningful short-covering rally. Rather than attempting to sell new lows, these traders appear to be happy with refreshing on minimal short-covering rallies." -------------------------------------------------------------------------------- MARKET SNAPSHOT AT 0630 GMT LAST PCT CHG NET CHG S&P 500 1,357.99 0.25 % 3.41 NIKKEI 8,953.31 -0.63 % -56.34 MSCI ASIA EX-JP 492.94 -1.36 % -6.79 EUR/USD 1.2915 -0.12 % -0.0015 USD/JPY 79.83 -0.04 % -0.0300 10-YR US TSY YLD 1.850 -- -0.02 10-YR BUND YLD 1.517 -- -0.03 SPOT GOLD $1,582.81 -0.69 % -$10.92 US CRUDE $96.02 -1.09 % -1.06 GLOBAL MARKETS-Shares fall on euro zone fears, JPMorgan loss Surprising JPMorgan loss hits U.S. stock market late Nikkei holds steady, Nikon surges after earnings Brent falls below $112, euro zone woes weigh Euro hits 3-1/2-mth low, stop-loss sales add to woe Gold heads for worst weekly fall since Copper eases as investors eye China data COMPANY NEWS: TELEFONICA The telecom major posted a 54-percent decline in first-quarter net profit on Friday after the value of its stake in Telecom Italia plunged and prices fell in its recession-hit home country. CREDIT AGRICOLE French bank Credit Agricole reported a steeper-than-expected 75 percent drop in quarterly profit on Friday as it took 940 million euros ($1.22 billion) in Greece-related write-downs, the latest blow from its ill-fated Emporiki acquisition. AXA Europe's No. 2 insurer, AXA, reported a 0.8 percent rise in first-quarter sales to 28.1 billion euros ($36.4 billion) on Friday as strength in casualty insurance offset falling asset-management fees and scant life-insurance growth. VALLOUREC The French maker of seamless steel tubes cut its sales outlook for 2012 as demand from markets outside the oil and gas sector shrunk and as new sites in Brazil and the United States took more time to become operational. IAG International Airlines Group, formed by the merger of British Airways and Iberia, said first quarter losses more than doubled as higher fuel costs and weakness in Spain helped wipe out any benefits from rising revenues. EDF The French state-controlled power group reported a 6.3 percent rise in first-quarter sales, after bitterly cold temperatures boosted electricity demand and prices. ENEL Italy's biggest utility Enel said on Thursday its core earnings in the first quarter fell 2.2 percent due to lower margins generated in its domestic business. DIA The world's no.3 discount grocer, on Friday reported net profit of 14.2 million euros ($18.40 million), up 246 percent from the same period in 2011. SWISS BANKS Attempt to reach a global deal on tax with the United States covering all 300 banks appears to have failed as the majority of banks don't want to contribute to a billion-dollar settlement, the Tages-Anzeiger reports FRESENIUS Fresenius SE said it plans to raise 1 billion euros ($1.3 billion) by selling 13.8 million new ordinary shares to institutional investors to help finance its takeover of hospital operator Rhoen Klinikum. THALES The French defence electronics company reported first-quarter revenue up 7 percent, helped by the inclusion of part of the sales of naval shipbuilder DCNS in its results even as demand slipped in core defence and security markets. PEUGEOT General Motors plans to build mid-sized cars for PSA Peugeot Citroen, while the French automaker will assemble a compact model for GM's Opel brand as part of their new alliance, according to press reports on Thursday. FIAT Sales of Ferrari, the high-end Italian sports car, rose more than 13 percent to 556.1 million euros in the first quarter of this year, helped by strong sales in the U.S., Britain and Germany, which offset a 34 percent fall in crisis-hit Italy. DEUTSCHE TELEKOM T-Mobile USA CEO Philipp Humm said his company was not interested in wireless airwaves that its biggest rival, Verizon Wireless, has offered to sell.