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Stocks fell on Thursday, hit by losses in financial companies after Bank of America Corp reported a sharp drop in earnings, stoking concern the credit crunch was dragging on profits and the economy.

The dollar dropped to a record low against a basket of currencies and the euro on Thursday after Bank of America's third-quarter earnings results missed estimates and renewed concerns of a U.S. economic slowdown.

Stocks fell on Thursday as shares of financial services companies slid on concerns about the lingering effects of the credit crunch following Bank of America Corp's disappointing quarterly results. The No. 2 U.S. bank said profit plummeted 32 percent, dragging down shares of other big banks and renewing worries about the financial sector's outlook.

Bank of America Corp, the second-largest U.S. bank, posted a much larger-than-expected 32 percent drop in quarterly profit on Thursday, hurt by mounting credit losses and dismal investment banking results.

Oil prices touched a new peak of $89 a barrel on Wednesday as investors fretted over possible military action by Turkey in northern Iraq and a potential supply crunch this winter.

China's CITIC Bank Corp Ltd is bidding for a stake in Bear Stearns Cos, a senior Chinese regulator said, in the first official confirmation of media reports that the state-run bank was a potential suitor for the smallest of Wall Street's five big independent brokerages.

Major stock indexes fell on Monday amid lingering worries that problems plaguing the credit markets have not been eliminated yet.

U.S. stocks fell on Monday, led lower by the financial services sector after Citigroup Inc offered a gloomier outlook and worries resurfaced about the stability of the buyout market.

Citigroup Inc, the largest U.S. bank, said on Monday third-quarter profit fell 57 percent, hurt by losses from subprime and leveraged loans, fixed-income trading and its U.S. consumer business.

Stock futures were little changed on Monday as investors paused after major indexes hit record highs on Friday and before the start of the quarterly earnings reporting season.

Blue-chip stocks fell on Tuesday as investors booked profits following a record reached in the previous session, but in the broader market, bank stocks and home builders gained as investors bet the worst of the credit squeeze may be over.

Stocks edged lower on Tuesday as a drop below $80 a barrel in oil hurt energy shares, offsetting optimism about further interest rate cuts fueled by the latest disappointing news on housing.

Stocks were set to open slightly higher on Monday, helped by optimism about shares' performance in the third quarter, while a profit warning from Citigroup Inc was expected to weigh on the financial sector.

Big banks try to gird for crises as a matter of course and investors will soon learn how prepared they were for this summer's credit crunch. Analysts and investors are speculating how badly Citigroup Inc, Bank of America Corp, JPMorgan Chase & Co and smaller rivals may have gotten caught by a flight from risk that caused the value of billions of dollars of mortgages and loans to evaporate.

The consortium that agreed to buy student lender Sallie Mae for $25 billion said on Wednesday that as of today conditions for the closing of the deal would not be met.

Merrill Lynch & Co Inc faces a $1.5 billion third-quarter loss on its fixed-income business, driven by $4 billion in asset write-downs connected to leveraged loans and mortgages, a Goldman Sachs analyst said on Wednesday.

Bank of America Corp said it will lay off about 2,500 workers in Illinois and 1,500 in Michigan over the next two years in connection with its $21 billion purchase of LaSalle Bank Corp from Dutch bank ABN AMRO Holding NV.

Shares in China Construction Bank (CCB) closed 32 percent higher on their Shanghai debut on Tuesday, beating other big Chinese lenders' first-day gains and boosting hopes for future large Shanghai share offers.

The dollar sank to a 15-year low against major currencies on Thursday while the euro rose above $1.40 for the first time as the impact of the U.S. Federal Reserve's interest rate cut continued to sweep across markets.

Hartford Financial Services Group Chief Financial Officer David Johnson said on Monday the insurer will generate $140 million of surplus in the second half of 2007, giving it a total of $640 million available.

Barclays won shareholder support today for its €62 billion (£42 billion) bid to acquire ABN Amro, the Dutch bank, but said that it was not committed to a deal at any price.

Bank of America sold 230 billion yen ($2 billion) of global bonds on Friday, sources said, joining a handful of major banks that have sought to raise cash in Japan's stable credit markets.

Countrywide Financial Corp, the largest U.S. mortgage lender, said on Thursday that it had lined up $12 billion of secured financing to help cope with a housing slowdown that has reduced loan demand and will lead to widespread layoffs.

Foreign companies that have poured billions of dollars into Chinese stocks are not looking to bail out, despite a decision by two major U.S. firms to cash in and realize huge profits from their investments.

Countrywide Financial Corp shares closed down almost 2 percent on Tuesday following a report the largest U.S. mortgage lender was working on a strategic investment similar to the deal with Bank of America Corp last month in which it received a $2 billion injection.

Consumers are carrying a record $907 billion in credit card debt, and that looks likely to jump now that the housing slump has blunted another popular financing tool -- home equity loans. Americans cashed out hundreds of billions of dollars in home equity as credit came cheap in a five-year housing boom that ended about 18 months ago.

Two of the largest U.S. banking companies said on Monday that tough credit market conditions may cause higher losses related to lending.

President George W. Bush's plan designed to limit the number of Americans who default on subprime mortgages might be a small positive for the commercial and investment banks exposed to them but does little to alleviate broader concerns about credit losses, analysts said.

Shares of Countrywide Financial Corp dropped as much as 7 percent on Monday after analysts slashed earnings estimates for the largest U.S. mortgage lender and a report showed existing home sales fell.