GLOBAL MARKETS-Oil at new record, stocks slump on outlook

(Recasts with U.S. markets, adds byline; changes dateline; previous LONDON)

* Stocks fall as oil hits record

* Dollar gains, bond prices fall on U.S. retail sales

* Wal-Mart, Hewlett-Packard lead U.S. shares lower

By Herbert Lash

NEW YORK, May 13 (Reuters) - Oil prices jumped to a record near $127 a barrel and stock markets slipped on Tuesday as bank write-downs raised concerns in Europe and Wal-Mart's cautious outlook pointed to a tough U.S. economic environment.

The slide in stocks overshadowed earlier optimism after a U.S. government report showed surprising strength in April retail sales, excluding the hard-pressed autos sector.

U.S. Treasury debt prices fell because the retail sales data hinted that economic weakness in the United States might not be as pronounced as anticipated, while a rise in import prices underscored the persistent inflation threat to bonds.

The retail sales report helped lift the dollar broadly as it bolstered the view that the Federal Reserve will probably not cut interest rates again next month, which would hurt the dollar's appeal to investors.

Oil surged after Iran, a member of the Organization of Petroleum Exporting Countries, said it was studying a plan to cut output despite signs that record-high prices are hurting consumer nations.

On Wall Street, shares of Hewlett-Packard (HPQ.N) dragged down the Dow after it struck a deal to buy Electronic Data Systems EDS.N for $12.6 billion. Some analysts said HP was paying a rich premium for a slow-growing business.

HP shares fell 6.6 percent to $43.68, making it the biggest drag on the Dow Jones industrial average and the benchmark Standard & Poor's 500 Index.

Wal-Mart Stores Inc (WMT.N) said quarterly profit rose 7 percent as price-wary shoppers snapped up discounts. But its shares fell after the world's largest retailer indicated second-quarter results could miss Wall Street estimates.

Wal-Mart shares fell 2.2 percent to $56.75.

By early afternoon, the Dow .DJI was down 57.40 points, or 0.45 percent, at 12,818.91. The S&P 500 .SPX was down 1.48 points, or 0.11 percent, at 1,402.10. The Nasdaq Composite Index .IXIC was off 3.31 points, or 0.13 percent, at 2,485.18.

European equities ended slightly lower as inflation fears that hit UK stocks and the banking sector fell on renewed concerns over asset write-downs from a credit crisis that is still spreading across Europe.