NEW YORK, March 28 (UPI) -- U.S. stock indexes tumbled Friday afternoon as a modest morning rally gave way to a retailer's prediction of weak first quarter sales.

J.C. Penny's statements took their toll on major market boards, analysts said.

The Dow Jones industrial fell 86.06 points by close Friday, off 0.7 percent to 12,216.40.

The Standard and Poor's 500 index lost 10.54 points to 1,315.22, off 0.8 percent.

The Nasdaq composite index dropped 0.86 percent to 2,261.18, down 19.65 points.

On the New York Stock Exchange 1,056 stocks advanced and 2,057 declined Friday on a volume of 1.353 billion shares traded.

The 10-year U.S. Treasury note gained 19/32 to yield 3.453 percent.

The dollar was weakened. The euro traded at $1.5802 Friday from Thursday's $1.5775, while the dollar traded at 99.21 yen from Thursday's 99.76 yen.

In Tokyo, the Nikkei average gained 215.89 points to close the week at 12,820.47, up 1.71 percent.

In London, the FSTE 100 index lost 13.10 points Friday to 5,704.40, down 0.23 percent.

DETROIT, March 28 (UPI) -- United Auto Workers membership dropped by more than 70,000 in 2007 as the U.S. auto industry shed jobs and the union failed to find new converts.

The 14 percent drop, a loss of 73,538 members, was slightly less than the 75,500 auto and auto parts industry jobs lost in 2006, the Detroit Free Press reported Friday. UAW membership peaked at 1.5 million in the 1970s, but dwindled to 464,910 by the end of 2007, the newspaper said.

The union has found new members in the auto dealership and casino industries, but has only organized workers at one foreign-owned auto plant, a Volkswagen dacility in Pennsylvania that folded 20 years ago, the Free Press said.

UAW revenues are up 8 percent, however, reaching $327.6 million in 2007, the report said.

OTTAWA, March 28 (UPI) -- British video game developers have called for an investigation into Canada's tax laws, claiming they have produced a talent migration.

The Canadians have driven a tank over the French Citroen and have now parked on our lawn, said Paul Jackson, who heads a game industry organization in Britain.

It is becoming very challenging to keep core development studios here, Jackson said in an interview with the Financial Times.

Britain's Ministry of Culture, Media and Sport has filed a protest with the European Commission concerned that state aid offered to computer games companies … in Canada may not be compatible with World Trade Organization principles, the ministry told Canwest News Service.

The Canadian Department of Foreign Affairs and International Trade rebuffed the claim. Canada fully complies with its WTO obligations, the department said.

SEATTLE, March 28 (UPI) -- Starbucks Chief Executive Howard Schultz said the company would not change its tip-pooling policy even after losing a $100 million lawsuit in California.

Schultz made the statement in a voice mail to thousands of employees Wednesday, saying the court ruling was extremely unfair and beyond reason.

I could go on and on about how wrong I think it is, he said.

A San Diego court ruled that Starbucks's policy of including shift managers in the distribution of tips was illegal. The court ordered Starbucks to return $100 million in lost tips to current and former baristas.

Starbucks will appeal the decision, the company said, but since the ruling, baristas in Massachusetts and Minnesota have filed similar suits. Employees in other states are considering suits, as well, the Seattle Post-Intelligencer reported Friday.

A spokeswoman for the coffee shop chain said Starbucks does not decide how tips are divided.

Stacey Krum also said the tip-sharing policy would continue until the appeal was decided.