U.S. airline shares drop on fuel, economy

NEW YORK (Reuters) - Shares in U.S. airlines dropped on Friday, led by an 8 percent fall by Delta Air Lines (DAL.N: Quote, Profile, Research), as investors fret over high jet fuel prices and an economic slowdown.

"The stocks are feeling a lot of pressure as investors continue to recognize the major risks that airlines are facing," said Morningstar equities analyst Brian Nelson.

"Investors are coming to the realization that if we do have a prolonged downturn in passenger demand and jet fuel prices stay where they are, there could be some major concerns about the survival of some of these carriers," he added.

Oil prices, which affect the cost of jet fuel, fell on Friday but held stubbornly above $110 a barrel.

The Amex airline index fell 4.6 percent to near its all-time low as the broader stock market reeled on concerns about cash position at Bear Stearns BSC.N.

Delta was off 84 cents to $9.68, Continental Airlines (CAL.N: Quote, Profile, Research) dropped 7.2 percent to $19.91 while American Airlines parent AMR Corp (AMR.N: Quote, Profile, Research) tumbled 6.3 percent to $9.30 in afternoon trading.

(Reporting by Chris Reiter, editing by Mark Porter)