US shares lower amid oil jitters, housing data Tue Aug 23, 6:22 PM ET

NEW YORK (AFP) - Wall Street shares slumped amid jitters over crude oil prices trading near record highs and a larger-than-expected decline in monthly existing home sales.

The Dow Jones Industrial Average dropped 50.31 points (0.48 percent) to close at 10,519.58 and the Nasdaq composite was off 4.16 points (0.19 percent) at 2,137.25.

The broad-market Standard and Poor's 500 index declined 4.14 points (0.34 percent) to 1,217.59.

The market digested news of a 2.6 percent drop in July existing home sales, even though the total annualized rate of 7.16 million was the third-highest level ever.

"I thought the housing numbers were OK, although they were lighter than estimates," said Mike Holland, manager of the Holland Balanced Fund.

"This is really just a late summer doldrums market," Holland said. "In late summer volume dries up and the market just kind of flops around."

But Joel Naroff at Naroff Economics found the housing report more troubling.

"With so many homes on the market, the risk of a meltdown if mortgage rates jump is increasing sharply," Naroff said.

"There is much speculation out there and turnover is key to the stability of the market right now. Any lengthening in the time to sell and we could start seeing price cuts. And once that happens, it would likely snowball."

The market also focused on energy costs with crude oil futures edging up to 65.71 dollars a barrel in New York , not far from the all-time high of 67.10 dollars.

Stephen Gallagher at Societe Generale in New York said the surge in energy costs may be having a greater impact on consumer spending and economic activity than generally believed.

"The damage already inflicted by higher oil prices has gone unnoticed because it was relatively small compared to the overall growth in consumer spending," he said.

"However, there are reasons to believe that the magnitude of the damage could increase going forward as the factors that helped soften the blow are no longer present," he adding, noting that low interest rates are rising and that consumers are less able to extract money from home equity loans.

European stock exchanges retreated in line with a sluggish start to the day on Wall Street and in response to strike fears and profit-taking.

The London FTSE 100 index fell 0.34 percent to close at 5,302.2 while in Paris the CAC 40 shed 1.10 percent to end the session at 4,436.56.

The Frankfurt DAX gave up 0.48 percent to finish at 4,917.74.

The Eurostoxx 50 index of leading eurozone shares lost 0.94 percent to reach 3,299.28.

Among active shares on Wall Street, Dow component Citigroup fell 64 cents to 43.56 after a shakeup in which Marge Magner, who ran the consistently profitable consumer division, will step down at the end of September.

Intel fell 34 cents to 25.72 as chief executive, Paul Otellini unveiled strategic plans during the Intel Developer Forum, a semi-annual gathering of chip engineers and designers.

Lucent was up 11 cents at 2.98 after Prudential Equity Group upgraded telecommunications-equipment provider to overweight from neutral weight, saying continued wireless momentum should boost earnings in the fourth quarter.

PetroKazakhstan, the Canadian oil firm that agreed to be bought by China National Petroleum Corp. International, for 4.18 billion dollars, rose 65 cents to 54.40.

Bonds were firm as investors flocked to safety. The yield on the 10-year US Treasury bond dipped to 4.187 percent from 4.219 percent Monday while that on the 30-year bond eased to 4.405 percent against 4.426 percent. Bond yields and prices move in opposite directions.