U.S. stock futures dropped Friday as after American International Group posted a multi-billion-dollar loss.

AIG reported a US$5.29 billion loss late Thursday, as the insurance giant took a big charge related to the estimated market value of credit derivatives.

Here at home, first-quarter profit at Royal Bank fell 17 %, with the bank citing higher writedowns and loan losses for the decline.

The bank said today that it made just under $1.25 billion in the quarter, or 95¢ a share. In the same quarter of the previous year, Royal made a profit of $1.32 billion, or $1.01 a share.

In economic news, Statistics Canada reported that prices for manufactured products continued moving upward in January, similar to the pace set in December, led by primary metal products and refined petroleum products. Prices for raw materials surged on the strength of rebounding prices for crude oil.

From December to January, prices charged by manufacturers, as measured by the Industrial Product Price Index (IPPI), rose 0.9%, which is comparable with the average increase for November and December.

The Raw Materials Price Index (RMPI) jumped 3.4% from December to January, a much higher rate of increase than the 0.4% gain recorded in December.

Separately, Canada’s balance of international payments on current transactions in the fourth quarter of 2007 slipped into its first deficit since 1999 (negative $513 million seasonally adjusted). This was led by a further narrowing of the surplus on goods and a deterioration of the deficit on international travel. On the financial side of the ledger, non-residents’ total investments in Canada, led by direct investment takeover activity, exceeded Canadian investments abroad in the fourth quarter.

The Canadian dollar opened at US101.85¢ this morning, down more than half a cent before a current-accounts report from Ottawa.

South of the border, U.S. personal consumption climbed in January by 0.4% as income growth dipped, but the Federal Reserve’s preferred inflation gauge, the PCE price index excluding food and energy, remained at 2.2%, above the central bank’s comfort zone.

Oil futures fell 64¢ to US$101.93 a barrel while gold futures rose US$5.20 to US$972.70 an ounce.

Overseas, Tokyo’s Nikkei closed down 2.32%. London’s FTSE is down 1.06%, Paris’s CAC 40 gave up 1.15% and Frankfurt’s DAX lost 1.24%.

On Thursday, financials tempered gains by surging energy and materials stocks on the Toronto Stock Exchange, as CIBC reported a first quarter loss of $1.46 billion.

The S&P/TSX composite index closed up 95.51 points, or 0.69%, to end at 13,873.89.

CIBC shares lost $1.05, or 1.52%, to close at $67.95, after it announced a $1.46 billion loss for Q1 on the day of its annual meeting.

The junior S&P/TSX Venture composite index gained 55.04 points, or 2%, to finish the day at 2,809.50.

The Canadian dollar closed out at US102.41¢.

In New York, U.S. stocks ended lower on a fresh sign of weakness in the job market and the Federal Reserve chairman’s warning that the anemic housing market could cause small-bank failures.

The Dow Jones industrial average fell 112.10 points, or 0.88%, to end the session at 12,582.18.

The S&P 500 dropped 12.34 points, or 0.89%, to close at 1,367.68.

The tech-heavy Nasdaq composite index closed down 22.21 points, or 0.94%, to close at 2,331.57.