NEW YORK (AP) - Stocks extended their decline Thursday after the Labor Department reported another hefty jump in consumer prices.

The 0.8 percent overall rise in July's Consumer Price Index was not as large as June's increase, but it was twice as high as the market expected, and brings inflation to its highest annual pace in 17 years. The core index, which eliminates food and energy prices, is not up as much, but it still rose by 0.3 percent last month - slightly more than forecast.

Wall Street has been concerned that consumers are paring back their discretionary spending in the face of higher prices, in addition to falling home values and a chancy job market. The Labor Department also said claims for unemployment benefits fell by 10,000 last week - less than anticipated.

Investors have also been worried about the world's major banks, which have seen downgrades by several analysts lately after reports of more credit losses at banks such as UBS AG and JPMorgan Chase & Co.

The financial sector recovered a bit in early trading although Irvine, Calif.-based RealtyTrac reported that foreclosure filings grew by 55 percent in July compared with the same month a year ago.

After two straight sessions of triple-digit losses, the Dow Jones industrial average fell 73.11, or 0.63 percent, to 11,459.85 in the first hour of trading.

Broader stock indicators also slipped. The Standard & Poor's 500 index fell 8.34, or 0.65 percent, to 1,277.49, and the Nasdaq composite index fell 4.19, or 0.17 percent, to 2,424.43.

Bonds edged higher after the Labor Department's data. The yield on the benchmark 10-year Treasury note, which moves opposite its price, dipped to 3.91 percent from 3.94 percent late Wednesday.

The dollar fell against most other major currencies, while gold prices also turned lower.

Investors were initially optimistic Thursday about Wal-Mart Stores Inc.'s 17 percent rise in second quarter profit and its full-year outlook boost. The world's largest retailer has benefited from the economic slowdown, as U.S. shoppers search for lower prices.

Wal-Mart shares, however, fell 60 cents to $57.28.

Light, sweet crude fell 72 cents to $115.28 a barrel on the New York Mercantile Exchange.

The Russell 2000 index fell 1.60, or 0.21 percent, to 746.09.

Overseas, Japan's Nikkei stock average fell 0.51 percent. In afternoon trading, Britain's FTSE 100 rose 0.40 percent, Germany's DAX index fell 0.54 percent, and France's CAC-40 rose 0.38 percent.