* JP Morgan, Wells Fargo shares fall after results
* Retail sales unexpectedly drop, sentiment also down
* Energy and material shares among the day's weakest
* Indexes down: Dow 0.2 pct, S&P 0.5 pct, Nasdaq 0.3 pct
By Ryan Vlastelica
NEW YORK, April 12 (Reuters) - U.S. stocks fell on Friday, retreating from the previous session's record levels as financials were pressured by a pair of weak bank results and by a delay in the closing of a large bank deal.
Wall Street was also pressured as weak retail sales and sentiment numbers were the latest data to point to weakening economic conditions, though stocks remain sharply higher on the week. Still, analysts said the gains, which have taken the S&P 500 up 11 percent so far this year, have equities vulnerable to a pullback.
"We're due for choppiness given the run we've had, especially since the strong data we've seen recently looks increasingly misleading," said Hank Herrmann, chief executive of Waddell & Reed Financial Inc in Overland Park, Kansas.
"We're moving at a slower pace, and those who got overly excited about GDP growth are probably pulling in their horns a bit."
The CBOE volatility index VIX, Wall Street's so-called fear gauge, rose 4 percent to 12.73. For the year, the Dow has gained more than 13 percent and the Nasdaq is up 8.7 percent.
Both JPMorgan Chase & Co and Wells Fargo & Co were lower after reporting results, with JPMorgan hit by a decline in revenue, and Wells by fewer home loans. Shares of Wells dropped 1.3 percent to $37.03, while JPMorgan, a Dow component, was off 0.2 percent at $49.22.
"The numbers weren't terrible, but also not terribly inspiring," said Herrmann, who helps oversee $105 billion in assets. "I wanted to see more credit growth as confirmation that the economy is doing better and that didn't show up."
Earnings for S&P 500 companies are expected to grow at a modest 1.2 percent in the first quarter, down from a January forecast of more than 4 percent, according to Thomson Reuters data. With only 6 percent of the S&P having reported thus far, 62 percent of companies have beaten expectations.
The S&P financial sector lost 0.7 percent, and was also pressured by a delay in the closing of M&T Bank Corp's acquisition of Hudson City Bancorp Inc.
M&T shed 4.4 percent to $100.28 while Hudson slumped 5.7 percent to $8.27 as the S&P's biggest percentage decliner.
The Dow Jones industrial average was down 25.48 points, or 0.17 percent, at 14,839.66. The Standard & Poor's 500 Index was down 7.12 points, or 0.45 percent, at 1,586.25. The Nasdaq Composite Index was down 9.60 points, or 0.29 percent, at 3,290.55.
The S&P 500 is up about 2.4 percent for the week, and the Dow up about 1.8 percent and Nasdaq up about 2.4 percent. The S&P has only had two weeks in 2013 with bigger gains.
Data showed retail sales fell 0.4 percent in March, while February's strong gain was revised down slightly. Consumer spending plays a key role in the U.S. economy, accounting for two-thirds of activity.
Another report showed consumer sentiment fell to a nine-month low in early April amid gloom about the long-term health prospects for the U.S. economy.
Investors have been rattled by indications economic growth could be softening, particularly after last week's disappointing jobs number, though that has not derailed the market rally so far.
The advance in equities in recent months was partly buoyed by the Federal Reserve's economic stimulus efforts, and analysts are viewing the first-quarter earnings season as a test for whether those gains are justified by corporate performance.
Material and energy stocks also fell alongside a drop in oil and precious metal prices. Oil prices sank 2.1 percent to an eight-month low while gold lost 4 percent and hit its lowest since July 2011. Prices were hit by concerns over the global economic outlook and the impact it could have on demand.
Newmont Mining Corp fell 5.1 percent to $36.67 while Newfield Exploration was down 4.5 percent to $21.61. The SPDR Gold Shares ETF fell 3.8 percent to $145.32 and hit its lowest since July 2011. Friday marked the worst day for the gold ETF since Feb. 2012.