U.S. stocks fell at Friday's start as the financial sector spouted more leaks as American International Group Inc. reported a $7.8 billion loss and Citigroup Inc. unveiled plans to shed about half a trillion dollars in assets.

"Perhaps the worst of the credit crisis isn't over, we seem to be finding more bodies here as we work our way through this mess," said Art Hogan, chief market strategist at Jefferies & Co.

The Dow Jones Industrial Average (DJI) shed 108.2 points to 12,758.58, with 27 of its 30 components trading lower.

The S&P 500 (SPX) shed 10.96 points to 1,386.72, while the Nasdaq Composite ( RIXF) dropped 9.16.04 points to 2,435.2.

Ahead of the opening bell, stock index futures had lightly trimmed losses after the Commerce Department reported a sharp drop in exports as well as imports, driving the trade deficit down to $58.2 billion. .

U.S. stocks ended higher on Thursday, with better-than-expected April sales by Wal-Mart Stores Inc. (WMT) and others driving a mild rebound.

But those gains looked to be lost on Friday after the larger-than-forecast AIG (AIG) loss, which led Standard & Poor's and Fitch to cut the insurance giant's credit rating.

The financial sector was also hit by word from Citigroup (C) that the financial goliath would sell or downside pieces of its sprawling empire, with Citigroup presenting the plan on its web site.

And, the Financial Times reported Sovereign Bancorp Inc. (SOV) would raise as much as $2 billion in fresh capital from investors led by Banco Santander SA( STD).

Other developments in the sector included Wachovia Corp. (WB) ousting Ken Thompson as chairman, although retaining his title as chief executive.

And energy prices were again in the spotlight, with crude-oil futures recently up $1.9 to $125.9 a barrel.

Also on the commodities front, the U.S. Department of Agriculture on Friday reports its estimates on corn stocks, which according to analysts surveyed by Thomson Reuters may show a 47% drop.

The dollar dropped 0.9% against the Japanese yen, and also fell vs. the euro.

Elsewhere, Activision Inc. (ATVI) late Thursday reported a fourth-quarter profit as video games sales nearly doubled for the maker of the popular Guitar Hero game.

The Nikkei 225 ended 2.1% lower in Tokyo and the FTSE 100 dropped 1.2% in London.

  (END) Dow Jones Newswires
  05-09-08 0955ET
  Copyright (c) 2008 Dow Jones & Company, Inc.