AIG loss, oil, drug firms rattle investors : US Business

By Jennifer Coogan

NEW YORK (Reuters) - Socks fell on Friday after American International Group , the world's largest insurer, reported a record $7.8 billion quarterly loss, rekindling concerns about financial services companies.

Oil's price extended its record-breaking streak, rising above $126 a barrel and raising concern about higher inflation and slower economic growth.

Pharmaceutical company shares were a major drag after Mylan Inc reported a wider loss and revenue below analysts' forecasts and Bristol Myers Squibb Co fell on news that a generic version of blood-thinner Plavix may soon be approved in Europe.

AIG had to write down assets linked to subprime mortgages and said it would raise $12.5 billion in new capital to strengthen its balance sheet.

Another big financial company, Citigroup Inc said it intends to shed parts of its business and downsize to save about $400 billion in a bid to become more competitive.

"The crisis is not yet over," said Paul Nolte, director of investments at Hinsdale Associates in Hinsdale, Illinois. "Many more financial institutions will be needing to raise capital to shore up balance sheets."

The Dow Jones industrial average <.DJI> was down 109.99 points, or 0.85 percent, at 12,756.79. The Standard & Poor's 500 Index <.SPX> was down 11.17 points, or 0.80 percent, at 1,386.51. The Nasdaq Composite Index <.IXIC> was down 17.02 points, or 0.69 percent, at 2,434.22.

AIG shares were down 6 percent at $41.52.

Mylan stock fell 7.7 percent to $11.55, while Bristol Myers stock declined 3.9 percent to $21.90.

Energy stocks fell even though U.S. crude oil futures hit a record $126.20 a barrel.

"At some point oil gets too high for them to make money," said Todd Leone, head of listed trading at Cowen & Co. in New York. "The higher crude goes, the harder it is to pass along higher prices to the consumer."

Shares of Exxon Mobil fell 1.4 percent to $88.30. Chevron shares lost 0.9 percent to $96.52 on the NYSE.

(Editing by Kenneth Barry)

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