* Alcoa to report Q2 results after bell; loss expected
* Energy shares decline as crude oil futures drop
* Dow off 0.6 pct; S&P off 1 pct, Nasdaq down 0.7 pct (Updates to mid-afternoon, changes byline)
By Edward Krudy
NEW YORK, July 8 (Reuters) - U.S. stocks fell on Wednesday as lingering worries about the state of the economy hit risk appetites globally and investors grappled with an uncertain outlook for second-quarter earnings.
The earnings season unofficially begins after the bell, with the release of results from aluminum giant Alcoa Inc, the first Dow component to report. Investors are concerned that companies will have little good news in their quarterly reports and outlooks.
"A lot of people are waiting to see second quarter earnings and guidance," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.
"If you don't get some more optimistic commentary to support the move we had from March lows, we run the risk of running down another 5 percent."
The Dow Jones industrial average fell 48.45 points, or 0.59 percent, to 8,115.15. The Standard & Poor's 500 Index dropped 8.91 points, or 1.01 percent, to 872.12. The Nasdaq Composite Index lost 12.48 points, or 0.71 percent, to 1,733.69.
The major stock indexes briefly pared losses after an auction of reopened 10-year Treasury notes drew strong demand, easing concerns about the U.S. government's ability to finance spending. But sentiment was still broadly negative, with light volumes and about three stocks declining for each one advancing on the New York Stock Exchange.
Alcoa is expected to post its third straight loss due to falling demand. The stock fell 0.8 percent to $9.33 and was one of the biggest percentage losers on the Dow.
Energy shares dropped as August crude oil futures fell 4.4 percent to $60.14 per barrel, touching more than asix-week low.
The U.S. Energy Information Administration released data that showed gasoline and distillate inventories rose more than expected last week, pointing to ongoing weakness in demand -- adding to fears about the economy.
The S&P Energy index slid 1 percent as ConocoPhillips dropped 2.3 percent to $39.04.
Copper, a barometer for global demand, hit a fresh two-week low in an across-the-board commodities selloff.
In an overall shift away from riskier assets, investors in global currency markets unwound positions in which they borrowed in yen to fund riskier, higher-yielding investments. That sent the dollar, euro and other world currencies lower against the Japanese currency.
After a rally that pushed up the S&P 500 as much as 40 percent from 12-year lows in early March, investors have been met with a rash of data -- especially the weaker-than-expected June payroll report last week -- that has undermined hopes for an economic rebound.
"People were taken aback by the jobs number," said Todd Leone, head of listed trading at Cowen & Co in New York. They thought, 'How's the economy going to get going if they jobs number continues to be bad like that.'"
Leaders of the Group of Eight richest nations and the major developing powers are gathered for a three-day summit in Italy. They are expected to agree the world's economy is still too weak to remove stimulus measures.