(Recasts with U.S. markets, adds byline; changes dateline;
previous LONDON)
* Stocks fall as oil hits record
* Dollar gains, bond prices fall on U.S. retail sales
* Wal-Mart, Hewlett-Packard lead U.S. shares lower
By Herbert Lash
NEW YORK, May 13 (Reuters) - Oil prices jumped to a record
near $127 a barrel and stock markets slipped on Tuesday as bank
write-downs raised concerns in Europe and Wal-Mart's cautious
outlook pointed to a tough U.S. economic environment.
The slide in stocks overshadowed earlier optimism after a
U.S. government report showed surprising strength in April
retail sales, excluding the hard-pressed autos sector.
U.S. Treasury debt prices fell because the retail sales
data hinted that economic weakness in the United States might
not be as pronounced as anticipated, while a rise in import
prices underscored the persistent inflation threat to bonds.
The retail sales report helped lift the dollar broadly as
it bolstered the view that the Federal Reserve will probably
not cut interest rates again next month, which would hurt the
dollar's appeal to investors.
Oil surged after Iran, a member of the Organization of
Petroleum Exporting Countries, said it was studying a plan to
cut output despite signs that record-high prices are hurting
consumer nations.
On Wall Street, shares of Hewlett-Packard <HPQ.N> dragged
down the Dow after it struck a deal to buy Electronic Data
Systems <EDS.N> for $12.6 billion. Some analysts said HP was
paying a rich premium for a slow-growing business.
HP shares fell 6.6 percent to $43.68, making it the biggest
drag on the Dow Jones industrial average and the benchmark
Standard & Poor's 500 Index.
Wal-Mart Stores Inc <WMT.N> said quarterly profit rose 7
percent as price-wary shoppers snapped up discounts. But its
shares fell after the world's largest retailer indicated
second-quarter results could miss Wall Street estimates.
Wal-Mart shares fell 2.2 percent to $56.75.
By early afternoon, the Dow <> was down 57.40 points,
or 0.45 percent, at 12,818.91. The S&P 500 <.SPX> was down 1.48
points, or 0.11 percent, at 1,402.10. The Nasdaq Composite
Index <> was off 3.31 points, or 0.13 percent, at
2,485.18.
European equities ended slightly lower as inflation fears
that hit UK stocks and the banking sector fell on renewed
concerns over asset write-downs from a credit crisis that is
still spreading across Europe.
Credit Agricole <CAGR.PA>, France's biggest retail bank,
tumbled 5.7 percent after unveiling a capital increase of 5.9
billion euros ($9.1 billion) following more subprime
mortgage-related write-downs.
French rival Societe Generale <SOGN.PA>, Belgian-Dutch bank
Fortis <FOR.BR> and Britain's Alliance & Leicester <ALLL.L>
revealed combined write-downs of almost $3 billion.
SocGen fell 0.84 percent, Fortis slipped 1.36 percent and
A&L tumbled 10 percent.
In Britain, builders Redrow Plc <RDW.L> and Galliford Try
Plc <GFRD.L> warned that their results are being hit by a sharp
housing slowdown that the Royal Institution of Chartered
Surveyors said is the most widespread in at least 30 years.
The FTSEurofirst 300 <> index of top European shares
ended 0.03 percent lower at 1,346.08 points.
Stocks got a boost from the U.S. retail sales report
because they showed more resilience than many analysts had
anticipated.
"The market seems to see in the data some sort of positive
signal, but I don't think it's a green light to buy stocks,"
said Yann Lepape, chief of global macro strategy at Oddo
Securities in Paris.
Asian shares gained as banks were bolstered by further
signals that the worst of the credit crisis may now be over, a
sentiment that investors expressed on Monday.
Japan's Nikkei share average <> rose 210.37, or 1.5
percent, to 13,953.73.
The MSCI's index of Asian markets outside Japan
<.MIAPJ0000PUS> rose 0.6 percent, taking its gains since
hitting a mid-March low to around 17 percent.
Crude oil futures rose, helped by momentum caused by
soaring heating oil futures, traders said.
U.S. light sweet crude oil <CLc1> rose $1.41, or 1.13
percent, to $125.64 per barrel.
The dollar gained against major currencies, with the U.S.
Dollar Index <.DXY> up 0.34 percent at 73.197. The euro <EUR=>
fell 0.33 percent to $1.5494. Against the yen, the dollar
<JPY=> was up 0.87 percent at 104.66.
U.S. Treasuries sold off as retail sales data offered "some
encouragement perhaps that in the second quarter the consumer
has not rolled over and died yet," said Jay Mueller, senior
portfolio manager with Wells Capital Management.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
25/32 to yield 3.89 percent. The two-year U.S. Treasury note
<US2YT=RR> fell 7/32 to yield 2.43 percent. The 30-year U.S.
Treasury bond <US30YT=RR> slipped 37/32 to yield 4.61 percent.
Oil rose after Iranian President Mahmoud Ahmadinejad said a
proposal to reduce Iran's crude output was being reviewed by
experts, the semi-official Fars News Agency reported
"We're in a market where anything bullish is going to be
able to push the price higher," said Peter Beutel, president of
Cameron Hanover.
U.S. crude <CLc1> jumped $1.43 to $125.66 a barrel after
striking a record $126.98 earlier. London Brent crude <LCOc1>
rose $1.01 to $123.92 a barrel.
Gold dropped more than 2 percent as dollar gains on the
U.S. retail sales robbed bullion of some of its appeal.
Spot gold prices <XAU=> fell $14.55, or 1.65 percent, to
$867.35.
(Reporting by Herbert Lash; Editing by Jonathan Oatis)
