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Recent trading days have hammered equity markets, with the Dow Jones Industrial Average suffering a near 300 point loss on Wednesday alone. As declining stock prices have shattered investor confidence, many have made the trek to long-term fixed income ETFs, attempting to find safer havens until markets return to a less volatile environment. Against this uncertain backdrop, many are concerned that further signs of weakness in the already down-and-out eurozone could trigger another sharp sell-off.

The common currency area reports its second quarter GDP growth results later today; many believe that this report could give markets direction–especially after last week’s U.S. GDP results which came in lower than expected.

So far 2010 has been an interesting year for the euro zone, bringing on its first true crisis as a common currency. Concerns are mounting in several Euro countries as investors grow increasingly concerned that the heavy debt loads will lead to defaults and ongoing financial instability. The crisis initially focused on Greece, with Spain, Portugal, and Italy not far behind, but many of Europe’s “stable” economies are also in rough shape.

Despite the cloud of uncertainty lingering over the continent, the GDP growth prediction today is on the right side of zero. Economists expect the 16 country eurozone’s GDP to grow between 0.4% and 1%. Experts point to a recovery in the construction industry and strong growth in the manufacturing industries as the main catalysts for the quarter’s positive GDP growth. “We think the second quarter was strong, probably the peak of this part of the recovery,” said Stephane Deo at UBS. “Lead indicators are suggesting slower growth from second half 2010 onward, with a marked divergence between individual countries’ performance.” The German economy, the largest in the euro zone, is expected to lead the way; the forecasted growth rate for the quarter is 1.3%.

With this major report dropping today, the Vanguard European ETF (NYSEARCA:VGK) is Friday’s ETF to watch. This fund tracks the MSCI Europe Index, a benchmark made up of common stocks of companies located in 16 European countries. Of the 481 securities, majors names like Nestle SA (OTCPK:NSRGY) (2.64%), BP PLC (2.51%), and Royal Dutch Shell PLC (NYSE:RDS.A) (1.53%) make their way into the top holdings of VGK. The fund spreads its assets across a variety of market sectors, none of which receive a weighting over 23%. The country breakdown of VGK features several of the largest Euro-zone nations such as Germany, Spain, and Italy. VGK has suffered a loss of about 7% this year, but that could change quickly on Friday.

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Disclosure: Photo courtesy of Eric Chan. No positions at time of writing.

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Source: Friday’s ETF to Watch: Vanguard Europe