Norfolk Southern Corp. (NSC), the second- biggest railroad in the eastern U.S., fell the most in more than a year and larger rival CSX Corp. (CSX) tumbled after two coal companies cut their forecasts.

Norfolk Southern dropped $4.66, or 6.9 percent, to $62.88 at 10:55 a.m. in New York Stock Exchange composite trading. while CSX slid $1.40, or 6.9 percent, to $18.83. They pared earlier losses that dragged Norfolk Southern to the biggest intraday decline since May 2010 and CSX to its largest drop since Aug. 18.

Coal is the largest commodity by volume for the big U.S. railroads. Walter Energy Inc. (WLT) reduced its second-half sales forecast today, citing delays at mines in British Columbia and Alberta. Alpha Natural Resources Inc. (ANR) pared its outlook for full-year production because of a drop in Asia demand and lower- than-expected output at some mines.

Thats a point of evidence that the global economy is slowing down, Peter Tuz, who helps manage $1 billion as president of Chase Investment Counsel Corp. in Charlottesville, Virginia, said in a telephone interview. One of the real strengths of the market of the last few years has been the upward push of commodities driven by global demand.

Union Pacific Corp. (UNP), the biggest U.S. railroad, joined todays drop, sliding $2.54, or 2.9 percent, to $85.84. Union Pacific, CSX and Norfolk Southern make up the Standard & Poors 500 Railroads Index, whose 4.8 percent decline today was the second-worst among industry groups in the benchmark gauge.

Todays declines erased the railroad indexs advantage over the S&P 500 this year. The railroad index was down 6.5 percent for 2011 at 11 a.m. in New York, compared with 5 percent for the S&P 500.

Union Pacific, based in Omaha, Nebraska, slid 4.6 percent this year through yesterday. Jacksonville, Florida-based CSX was down 6.1 percent, and Norfolk, Virginia-based Norfolk Southern dropped 7.5 percent.

Walter Energy, based in Birmingham, Alabama, and Abingdon, Virginia-based Alpha Natural Resources both produce so-called metallurgical coal, which is used by steelmakers.

To contact the reporters on this story: Ed Dufner in Dallas at edufner@bloomberg.net; Arie Shapira in New York at ashapira3@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net