U.S. stocks dropped Thursday, dragged lower by financial shares as investors' concerns ramped higher regarding banks' foreclosure practices. The Dow Jones Industrial Average fell 40 points, or 0.4%, to 11056, putting a four session winning streak at risk a day after the index hit its highest close in more than five months.

Financials led the Dow's declines, as Bank of America dropped 6.2% and J.P. Morgan Chase fell 4%. Both are among the wave of major banks that are reviewing their foreclosures after temporarily suspending evictions due to concerns over robo signers who approve hundreds of foreclosure documents a day.

Among other banks reviewing foreclosures, Wells Fargo fell 5.3%. The drop follows probes by 50 state attorneys general into allegations that thousands of home foreclosures were improperly handled.

The technology heavy Nasdaq Composite shed 0.4% to 2431. The Standard & Poor's 500 stock index fell 0.7% to 1170, weighed by the financial sector's 2.5% decline. Telecom was the only sector trading in positive territory. U.S. jobs data added to investors' jitters Thursday.

The number of U.S. workers filing new claims for jobless benefits increased more than expected last week. The four week moving average, which aims to smooth volatility in the data, also rose. The U.S. trade deficit also rose in August, inflated by a record setting deficit with its largest trading partner, China.

But U.S. producer prices rose for the third month in a row in September on the back of higher food prices, a move that could help ease deflation concerns. Among stocks in focus, Yahoo rose 3.7% after The Wall Street Journal reported AOL and several private equity firms, including Silver Lake Partners and Blackstone Group, are considering a possible takeover bid for the Internet company.

Verizon Wireless, a unit of Verizon Communications, said it will sell Apple's iPad later this month, the first time Verizon will sell an Apple product in its stores. AT&T separately said it also plans to carry the iPad in its stores on the same day. Shares of Verizon gained 0.7%, while AT&T fell 0.1%. Apple rose 0.4%.

European market

European stocks drifted lower to end in negative territory Thursday, as banking shares came under pressure and weak U.S. economic data soured sentiment. The Europe Stoxx 600 index fell 0.2% to settle at 265.68, shedding earlier gains. London's FTSE 100 index dropped 0.4% to close at 5,727.21, as big banks fell. U.S. data helped spread some jitters.

Weekly jobless claims rose 13,000 to 462,000, compared to expectations for a decline. Markets took the data as a sign that there was no improvement in the sluggish U.S. job market.

A separate report showed producer prices rose a higher-than-expected 0.4% in September. Resource stocks rose in Europe, following the pattern seen in Asia but gains were less pronounced. In London, miners provided support, with Xstrata PLC rising 3.2% and Fresnillo PLC up 2.3%.

However, shares of African Barrick Gold PLC tumbled 9.5% on news the company cut its 2010 output target after it discovered fuel theft at its Buzwagi mine.

The French CAC-40 index fell 0.2% to settle at 3,819.17. Shares of Societe Generale SA fell 3.1%, while Credit Agricole SA was down 1.7%.

The German DAX 30 index bucked the weaker performance seen elsewhere in Europe, rising 0.3% to end at 6,455.27. In the utilities sector, shares of E.ON AG rose 1% and RWE AG gained 0.9% as investors shrugged off broker downgrades of the stocks.

Asian market

Asian stock markets were higher Thursday with regional resources stocks stronger on the back of a surge in commodity prices. In foreign exchange markets, a surprise decision by the Monetary Authority of Singapore to tighten policy helped accelerate broad U.S. dollar weakness, driving the Australian dollar within striking distance of parity with the U.S. dollar, the Canadian dollar to parity with the greenback, the Japanese yen to a 15-year high, the euro to its highest since Jan. 27 and the Swiss franc to an all time high.

Japan's Nikkei Stock Average was up 1.9%, South Korea's Kospi Composite was up 0.8% and Hong Kong's Hang Seng Index tacked on 0.7%. China's Shanghai Composite rose 0.2%. Wednesday's gains for Wall Street also helped sentiment as the DJIA rose for the fourth straight session to reach a five month high.

In Tokyo, Sumitomo Metal Mining surged 3.4% and Mitsui Mining & Smelting was up 5.3% and in China, Jiangxi Copper was up 1.6% and Zijin Mining was up 3.6%. Among oil related stocks, Inpex was up 3.1% and Japan Petroleum rose 1.9%. In Hong Kong, Cnooc was up 2.4% and PetroChina rose 2.0%.

Base metals

Base metals closed mixed on the London Metal Exchange Thursday after toppling from multi month highs in jittery trade. The metals had been finding upward support from a weaker dollar, but disappointing labor figures from the U.S. added to pressure that dragged the metals down from the higher end of their recent ranges.

LME three month copper managed to end higher on the day at $8,400 a metric ton, but the red metal was 1.1% down from its intraday high of $8,490/ton. Market players warned that, while the metals' uptrend remains intact, investor nerves are hampering gains.

Crude oil futures retreated from early gains Thursday, settling lower as a government report showed U.S. demand for petroleum products fell to the lowest level in nearly a year.

Light, sweet crude for November delivery settled 32 cents, or 0.4%, lower at $82.69 a barrel on the New York Mercantile Exchange after rising as high as $84.12 earlier in the session. Brent crude on the ICE futures exchange settled 11 cents lower at $84.53 barrel.

Data from the U.S. Department of Energy's Energy Information Administration tempered early gains in oil that resulted from a weakening dollar. The EIA reported a modest 400,000 barrel drop in crude oil inventories for the week ended Oct. 8.

The decrease surprised analysts that had expected stockpiles to grow, but additional data showed weekly demand for oil and petroleum products dropped to the lowest level since November. Gold futures printed a fresh record settlement as monetary tightening in Singapore sent investors out of the U.S. dollar and into the perceived hedge of the metal.

The most actively traded gold contract, for December delivery, rose $7.10, or 0.5%, to settle at $1,377.60 a troy ounce on the Comex division of the New York Mercantile Exchange. It hit $1,388.10 in electronic activity overnight, the strongest ever price for a most active contract.