AP Stock decline as Fannie, Freddie fall sharply Friday July 11, 10:29 am ET By Tim Paradis, AP Business Writer Stocks tumble in early going amid worries about Fannie, Freddie; oil sets fresh records NEW YORK (AP) -- Stocks tumbled Friday as investors focused on troubles at mortgage companies Fannie Mae and Freddie Mac and watched oil prices climb further into record territory. Fannie and Freddie at times each lost more than 40 percent on growing speculation that a government bailout is needed. A collapse of the two financiers would cause further shock to the financial system, and trigger more losses to banks and brokerages with significant holdings of mortgage-backed securities. ADVERTISEMENT Global banks and brokerages have scrambled to sell assets and raise capital in an effort to offset nearly $300 billion of write-downs linked to the credit crisis. Citigroup Inc. announced Friday it will sell its German retail banking operation to France's Credit Mutuel for $7.7 billion. Meanwhile, oil continued its ascent on supply concerns. A barrel of oil vaulted to a record above $147. The confluence of negative news offset a mostly positive quarterly report from General Electric Co. The conglomerate that owns everything from television network NBC to jet engine plants reported second-quarter profits that met analysts' expectations. However, the outlook across its business lines was mixed. In midmorning trading, the Dow Jones industrial average fell 102.91, or 0.92 percent, to 11,126.11 after being down more than 180 points in the early going. Broader stock indicators also lost ground. The Standard & Poor's 500 index fell 8.39, or 0.67 percent, to 1,245.00, and the Nasdaq composite index fell 19.97, or 0.88 percent, to 2,237.88. Light, sweet crude rose $4.82 to $146.47 per barrel on the New York Mercantile Exchange. Behind the rise are concerns about a disruption to tight global supplies amid tensions over Iran's launch of test missiles and the possible renewal of oil-related violence in Nigeria. Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.84 percent from 3.80 percent late Thursday. The dollar was mixed against other major currencies, while gold prices rose. In corporate news, Freddie Mac fell $3.26, or 41 percent, to $4.74, while Fannie Mae tumbled $4.74, or 36 percent, to $8.46 as investors worried about their stability. Piper Jaffray analyst Robert Napoli lowered his price targets on both companies, and said in a note to clients investors should "not be in a position that only two government-sponsored lenders are willing to make mortgage loans and, without them, our economy would collapse." Citi rose 18 cents to $16.45 after saying it will book a $4 billion gain from the sale of its German retail operation. The deal is part of a plan by Chief Executive Vikram Pandit to sell up to $500 billion in assets to help boost profitability. Investors remain cautious about the entire financial sector, especially ahead of second-quarter reports due next week from major names like JPMorgan Chase & Co. and Merrill Lynch & Co. JPMorgan declined 63 cents to $33.88 and Merrill fell 33 cents to $28.38. There are also new reports that InBev NV raised its takeover offer Anheuser-Busch Cos. The maker of Budweiser, Bud Light and other beers is expected to approve the new offer, which values the company at $70 a share, according to a report in The Wall Street Journal. Anheuser-Busch rose $4.97, or 7.3 percent, to $65.70. In economic news, the United States' trade deficit narrowed in May as exports -- including industrial supplies and consumer goods -- climbed to all-time highs. The Commerce Department said growing exports drove the trade gap down to $58.8 billion, a 1.2 percent decrease from April and the best showing since March. Investors are also examining a better-than-expected reading of the mood of consumers. The Reuters/University o