By Huw Jones

LONDON (Reuters) – Wall Street headed for mixed start on Thursday with investors preparing for the latest snapshot of economic growth and any signs that a big squeeze in shorted stocks has more to run.

Dow E-minis were up 52 points, or 0.19%, S&P 500 E-minis were off 5 points, or 0.12%. Nasdaq 100 E-minis were off 50 points, or 0.5%.

U.S. shares saw their sharpest falls in three months on Wednesday amid a squeeze on hedge funds holding short positions in stocks like GameStop that are being targetted by an army of retail buyers.

Investors were seeking refuge in U.S. dollar, with its index up at 90.72 from a January low of 89.206. Yields on the 10-year U.S. Treasury bond were flat. [US/]

The market “smells a bit of blood”, but it was unclear how far the squeeze has to go, said Ned Rumpeltin, European head of currency strategy at TD Securities. “It does feel like markets are trying to find a bit of a floor here,” he said.

The wait during Wednesday for a statement from the U.S. Federal Reserve probably kept some investors on the sidelines, but they would be freer to join in on Thursday, Rumpeltin said.

“What happens as we head into the weekend? All these retail investors have some spectacular gains on paper – will they be induced to cut and run and take profits?”

The Commerce Department’s snapshot at 1330 GMT of fourth- quarter gross domestic product in the United States is expected to show the recovery from the pandemic losing steam as 2020 came to a close.

U.S. jobless claims for the latest week were also due at 1330 GMT.

Earnings are due from American Airlines, Mastercard, Macdonalds, Dow Chemicals, JetBlue Airways, Amazon, Mondelez, and Visa.

Southwest Airlines Co’s shares fell in pre-trading after it reported an annual loss of $3.1 billion, its first since 1972 as the pandemic stalled demand.

BACK TO SQUARE ONE

European shares wiped out their gains in Europe for the year, soured by Wednesday’s sell-off on Wall Street, no end in sight to pandemic lockdowns and the squeeze in short positions.

The pan-European STOXX benchmark was down 0.5% at 400.9 points, after hitting its lowest point since December. London, Paris and Frankfurt were flat to lower.

“The initial optimism of early this year is starting to dissipate because of the prospects of tighter pandemic restrictions for longer, and concerns over ‘vaccine nationalism’,” said Michael Hewson, chief market analyst at CMC Markets.

The European Union, locked in a public spat with vaccine producer AstraZeneca, wants a shortfall in the company’s supplies to the bloc topped up from production in Britain.

“We could see much more choppiness and much more volatility. We have a bit of a perfect storm heading into the month end, which is weighing on equity markets, but I don’t think at the moment we are in a place where it’s going to come crashing off,” Hewson said.

Asian shares slid on Thursday while the safe-haven dollar rallied as Wall Street’s sell-off and delays in coronavirus vaccines provided an excuse to book profits on recent gains.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 2%, with valuations looking stretched after the index rose more than 6% just this month.

The euro eased to $1.2102 amid reports the European Central Bank felt markets were under-pricing the risk of more rate cuts.

The bounce in the dollar kept gold prices soft around $1,840 an ounce. [GOL/]

Global demand concerns restrained oil prices despite a drop in U.S. crude stocks. U.S. crude fell 15 cents to $52.71 a barrel. Brent crude futures dropped to $55.74. [O/R]

(Additional reporting by Alwyn Scott; editing by Christian Schmollinger, Ana Nicolaci da Costa, Larry King)