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.

Credit Agricole (CAGR.PA), France's biggest retail bank, tumbled 5.7 percent after unveiling a capital increase of 5.9 billion euros ($9.1 billion) following more subprime mortgage-related write-downs.

French rival Societe Generale (SOGN.PA), Belgian-Dutch bank Fortis (FOR.BR) and Britain's Alliance & Leicester ALLL.L revealed combined write-downs of almost $3 billion.

SocGen fell 0.84 percent, Fortis slipped 1.36 percent and A&L tumbled 10 percent.

In Britain, builders Redrow Plc (RDW.L) and Galliford Try Plc (GFRD.L) warned that their results are being hit by a sharp housing slowdown that the Royal Institution of Chartered Surveyors said is the most widespread in at least 30 years.

The FTSEurofirst 300 .FTEU3 index of top European shares ended 0.03 percent lower at 1,346.08 points.

Stocks got a boost from the U.S. retail sales report because they showed more resilience than many analysts had anticipated.

"The market seems to see in the data some sort of positive signal, but I don't think it's a green light to buy stocks," said Yann Lepape, chief of global macro strategy at Oddo Securities in Paris.

Asian shares gained as banks were bolstered by further signals that the worst of the credit crisis may now be over, a sentiment that investors expressed on Monday.

Japan's Nikkei share average .N225 rose 210.37, or 1.5 percent, to 13,953.73.

The MSCI's index of Asian markets outside Japan .MIAPJ0000PUS rose 0.6 percent, taking its gains since hitting a mid-March low to around 17 percent.

Crude oil futures rose, helped by momentum caused by soaring heating oil futures, traders said.

U.S. light sweet crude oil CLc1 rose $1.41, or 1.13 percent, to $125.64 per barrel.

The dollar gained against major currencies, with the U.S. Dollar Index .DXY up 0.34 percent at 73.197. The euro EUR= fell 0.33 percent to $1.5494. Against the yen, the dollar JPY= was up 0.87 percent at 104.66.

U.S. Treasuries sold off as retail sales data offered "some encouragement perhaps that in the second quarter the consumer has not rolled over and died yet," said Jay Mueller, senior portfolio manager with Wells Capital Management.

The benchmark 10-year U.S. Treasury note US10YT=RR fell 25/32 to yield 3.89 percent. The two-year U.S. Treasury note US2YT=RR fell 7/32 to yield 2.43 percent. The 30-year U.S. Treasury bond US30YT=RR slipped 37/32 to yield 4.61 percent.

Oil rose after Iranian President Mahmoud Ahmadinejad said a proposal to reduce Iran's crude output was being reviewed by experts, the semi-official Fars News Agency reported

"We're in a market where anything bullish is going to be able to push the price higher," said Peter Beutel, president of Cameron Hanover.

U.S. crude CLc1 jumped $1.43 to $125.66 a barrel after striking a record $126.98 earlier. London Brent crude LCOc1 rose $1.01 to $123.92 a barrel.

Gold dropped more than 2 percent as dollar gains on the U.S. retail sales robbed bullion of some of its appeal.

Spot gold prices XAU= fell $14.55, or 1.65 percent, to $867.35. (Reporting by Herbert Lash; Editing by Jonathan Oatis)