Stock head for lower open after AIG reveals need for cash

Friday, May 09, 2008 - 01:25 PM

By MADLEN READ
AP Business Writer

NEW YORK

Wall Street headed for a lower open Friday after the world´s largest insurer reported a wider-than-expected loss for the first quarter, rekindling investors´ anxiety about the strained state of the global financial system. Oil prices also advanced further into record territory, coming close to $126 and stirring unease about rising inflation.

American International Group Inc. late Thursday posted a first-quarter loss of $7.81 billion _ its second straight quarterly loss _ and revealed plans to raise $12.5 billion in the coming months. The insurer, like many of its peers in the financial services sector, has seen its investments in the credit markets plunge in value. In after-hours trading Thursday, AIG shares sank $3.27, or 7.4 percent, to $41.45.

Meanwhile, crude oil prices continued to trek into uncharted territory, keeping Wall Street´s inflationary concerns alive. In premarket electronic trading on the New York Mercantile Exchange, crude futures rose as high as $125.98 a barrel, after closing Thursday at a record settlement of $123.69.

The Commerce Department said the U.S. trade deficit narrowed in March as demand for imports registered the biggest decline since the last recession was ending.

A day after the stock market notched a modest advance, Dow futures fell 68, or 0.53 percent, to 12,756. Standard & Poor´s 500 index futures fell 7.30, or 0.52 percent, to 1,384.70, and Nasdaq 100 index futures fell 8.00, or 0.41 percent, to 1,957.00.

Bond prices rose ahead of the market´s open. The yield on the benchmark 10-year Treasury note, which moves opposite its price, slipped to 3.74 percent from 3.78 percent late Thursday.

Gold prices rose, while the dollar traded mixed against other major global currencies.

The economic figures arriving Friday illustrated the slowdown in the U.S. economy. The Commerce Department´s report on the trade deficit showed a bigger-than-expected decline. The deficit stood at $58.2 billion, a decline of 5.6 percent from February. The 2.9 percent drop in demand for imports was the steepest monthly decline since December 2001 _ a month after the last recession ended.

In corporate news, Citigroup Inc. said it is aiming for 9 percent revenue growth as it looks to recover from financial hits following deterioration in the mortgage and credit markets. The financial-services company logged $13.22 billion in revenue during the first quarter.

General Motors Corp. said in a regulatory filing that it would provide financial support to help settle the 10-week strike at auto parts supplier American Axle and Manufacturing Holdings Inc.

Overseas, Japan´s stock market fell 2.06 percent. By afternoon in Europe, Britain´s FTSE index fell 1.26 percent, Germany´s DAX index fell 1.31 percent, and France´s CAC-40 fell 2.17 percent.

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