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AIG Drags on Dow; Energy Stocks Fall

Stocks retreated Friday, weighed down by AIG after the insurer posted dismal earnings.

Crude oil's march above $125 -- and then $126 -- before the opening bell, then pulled back to spend the morning in the $124-$125 range.

Energy stocks, however, didn't follow crude's ascent amid concerns about margins.

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

The S&P energy index was off 1.3 percent. Both Exxon and Chevron were among the top five decliners on the Dow Jones Industrial Average.

In economic news, the trade deficit narrowed to $58.21 billionin March from a revised $61.71 billion in February, the Commerce Department reported; economist had expected a gap of $61.9 billion. Imports fell by the largest amount in six years, reflecting the weak dollar.

"This is a consequence of the weaker dollar -- everybody's been expecting it," Jack Bouroudjian of Brewer Investment Group told CNBC. "You get the currency down to a certain level, eventually you see something happen with our trade deficit," Brewer said. "That's exactly what we want to see -- this is good news for the market, believe it or not."

Insurance giant and Dow component AIG posted a loss of $7.81 billion, or $3.09 a share, for the quarter ended March 31. That followed a more than $5 billion loss in the fourth quarter of 2007. The company also said it will raise $12.5 billion in fresh capitalin the coming months to shore up its capital base.

Citigroup , the biggest U.S. bank, plans to sell roughly $400 billion of extraneous assets over the next two to three years as part of its overhaul under new CEO Vikram Pandit. Today is Citi's annual meeting with analysts and investors.

Bad news came from the European financial sector as well, where Dresdner Bank posted an operating loss of 453 million euro ($694.4 million) after writing off 845 million euros for the value of structured finance products, marring gains from property and casualty insurance at parent Allianz.

Ford shares ticked higher following news that billionaire investor Kerk Kerkorian has launched a tender offer to acquire 20 million more shares in the auto maker, which would raise his stake in the company to 5.5 percent.

Circuit City shares jumped as the electronics retailer opened its books to Blockbuster and its largest shareholder, Carl Icahn, signaling its willingness to accept a takeover bid. (Though, the Circuit City board hasn't made a final decision.) The turning point, it seemed, was a letter from Icahn indicating that he would buy the company if Blockbuster can't finance the deal.

Nvidia rose after several analysts raised their ratings on the stock to "buy." The chip maker missed forecasts but still posted an earnings gain of 33 percent. Analysts say demand for chips that go in mobile products make Nvidia an attractive buy.

Fellow chip maker Texas Instruments is holding its analysts day today. Long-term strategies and the company's analog-products division are expected to be on the agenda.

Clear Channel Communications , embroiled in a private equity controversy, reported a profit excluding items of 19 cents, better than the 21 cents estimated by analysts surveyed by Reuters.

Marvel Entertainiment ticked higher after the comic-book icon announced an exclusive licensing agreement with THQ to develop videogames based on Marvel characters. Marvel Super Hero Squad videogames are expected to debut in fall 2009.

Send comments to cindy.perman@nbcuni.com.

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