NEW YORK, Nov 15, 2007 (AP) -- Wall Street fell in early trading Thursday as investors grew more worried about the strength of consumer spending after the Labor Department reported an uptick in consumer prices and a larger-than-expected rise in unemployment claims.

The government's Consumer Price Index rose 0.3 percent in October on high energy and foods costs, in line with September's increase and analysts' forecast. Investors are concerned that rising inflation _ especially due to higher fuel prices _ could move consumers to cut back their overall spending and also prevent the Federal Reserve from lowering interest rates further in the coming months.

Meanwhile, the number of laid off workers filing claims for unemployment benefits rose last week by by 20,000 to 339,000, double what economists expected.

And J.C. Penney Co. reported a 9 percent drop in fiscal third-quarter profit on weak sales and cut its fourth-quarter outlook, indicating that housing market problems are are taking a toll on shoppers, as well.

Investors also reacted to a Barron's report late Wednesday that a General Electric Asset Management bond fund has suffered losses in mortgage-backed securities. The General Electric Co. unit is offering investors the option to redeem their holdings in the short-term institutional bond fund at 96 cents on the dollar. The losses in the bond fund raised concerns that the squeeze on credit markets could spread and hurt small investors.

Barclays Capital became the latest financial institution to record a writedown on losses stemming from turbulent credit markets. The unit of Barclays Group PLC took a $2.7 billion charge in the third quarter but the also said Thursday its profit beat last year's strong performance.

The Dow Jones industrial average fell 45.12, or 0.34 percent, to 13,185.89.

Broader stock indicators also dipped. The Standard & Poor's 500 index fell 5.64, or 0.38 percent, to 1,464.94. The Nasdaq composite index fell 3.24, or 0.12 pecent, to 2,641.08.

Government bond prices rose. The yield on the 10-year Treasury note, which moves opposite its price, slid to 4.22 percent from 4.25 percent late Wednesday.

Oil prices slipped on the New York Mercantile Exchange, where a barrel of light, sweet crude dipped 66 cents to $93.42. Gold prices fell as the dollar strengthened.

In other corporate news, Tyco International Inc. said its fiscal fourth-quarter profit slid 85 percent due to costs related to restructuring and the spin-off of the former conglomerate's health care and electronics units. For the full year, Tyco swung to a loss of $1.74 billion compared with a profit of $3.6 billion last year.

Tyco plummeted $1.25, or 19.5 percent, to $5.15.

Ralcorp Holdings Inc., a maker of private-label cereals, said it will buy Kraft Food Inc.'s Post cereals division for $1.65 billion plus $950 million in debt.

Kraft fell 21 cents to $32.77, and Ralcorp rose $4.55, or 8.2 percent, to $60.04.

The Russell 2000 index of smaller companies fell 4.44, or 0.57 percent, to 778.03.

Major stock indexes overseas slumped. Britain's FTSE 100 declined 1.34 percent, Germany's DAX index fell 1.73 percent, while France's CAC-40 shed 1.28 percent.

Japan's Nikkei stock average closed down 0.67 percent and Hong Kong's Hang Seng index fell 1.42 percent.