LONDON (AP) — Stocks mostly dropped on Friday on concerns that a brusque overhaul of China's industrial sector could cause a sharp slowdown in the world's second-largest economy.

Beijing has ordered companies to close factories in 19 industries where overproduction has led to price-cutting wars, affirming its determination to push ahead with a painful makeover of the economy. That move followed weak manufacturing data on Wednesday.
Communist leaders are trying to reduce reliance on investment and trade. But a slowdown that pushed China's economic growth to a two-decade low of 7.5 percent last quarter had earlier prompted suggestions they might have to reverse course and stimulate the economy with more investment to reduce the threat of job losses and unrest.
China's Shanghai Composite dropped 0.5 percent to 2,010.85.
Japan's Nikkei 225 index fell even further, closing 3 percent lower at 14,129.98, due to a big rise in the yen, which risks making the country's exports less competitive on international markets.
Japan on Friday said consumer prices rose in June for the first time in more than a year, an early sign Prime Minister Shinzo Abe's stimulus policies are working. While that is a promising sign in the long-term, the signs of inflation suggest interest rates could eventually also increase — higher rates tend to strengthen a national currency. The dollar was down 0.6 percent against the yen, at 98.67 yen.
In Europe, Britain's FTSE 100 index was down 0.3 percent to 6,571.71 while Germany's DAX was 0.5 percent lower at 8,258.18. France's CAC-40 bucked the trend, rising 0.4 percent to 3,973.45, thanks to a 5.7 percent rise in the shares of LVMH, the luxury goods maker, after it reported higher earnings.
Wall Street was expected to drop slightly on the open, with S&P 500 futures down 0.3 percent and Dow futures 0.2 percent lower.
Overall, trading has been quiet in recent days as a lot of people wait for next week's meeting of the Federal Open Market Committee in the U.S. for guidance on the tapering of U.S. government bond purchases, he said.
Since late last year, the U.S. Federal Reserve has been buying $85 billion in Treasury and mortgage bonds a month — a move that has kept long-term rates near record lows and supported economic recovery.
Elsewhere in the region, Australia's S&P/ASX 200 rose 0.1 percent to 5,042. Stocks in South Korea and New Zealand finished slightly higher while benchmarks in the Philippines, Malaysia, Indonesia and Taiwan fell. Hong Kong's Hang Seng was up 0.3 percent to 21,968.95
In energy trading, benchmark crude was down 75 cents at $104.74 a barrel in electronic trading on the New York Mercantile Exchange. It rose 10 cents to close at $105.49 on Thursday.
The euro was little changed at $1.3275 from $1.3277 late Thursday.
___

Teresa Cerojano in Manila, Philippines, contributed to this report.