STOCKS : Tokyo Market’s Advance Helps Dow Rise 8.56

The stock market scored a modest gain Friday, helped by an overnight rise in the Tokyo stock market but pressured by fears of higher U.S. interest rates.

The Dow Jones index of 30 industrial stocks gained 8.56 points to close at 2,704.28, after a steep 32.21-point loss Thursday.

Volume on the New York Stock Exchange reached a modest 132 million shares, compared to 175.9 million Thursday.

Advancing issues outnumbered declining ones in nationwide trading of New York Stock Exchange-listed stocks, with 884 up, 571 down and 527 unchanged.

“We did see some decent buying this morning,” said Tom Callahan at Yamaichi International. “Psychology is recovering; maybe the worst of the blood bath is over.”

Friday’s move was not nearly strong enough to offset the massive selling pressure that left the Dow index down 36.94 points for the week.

Still, the market tried to stage a comeback. New York traders picked up the trend in Tokyo, where the badly battered market rebounded Friday from a sharp loss. The key Nikkei 225-share index rose 528.82 points, or 1.77%, to 30,372.16 after a 3.13% fall Thursday.

The market also got a boost from the Commerce Department’s report of a modest 3.3% rise in February orders for durable goods after a record fall in January.

The market, however, sagged quickly following a news report from Japan that the Japanese government may issue dollar-denominated bonds in an effort to support the sagging yen, raising fears that the bond market may be flooded with a new supply of issues that would lower prices and lift interest rates on bonds. High interest rates could also pressure stocks.

IBM was down 1 1/2 at 105. A newspaper report said the computer giant has told customers it won’t deliver an upgrade to its line of mainframe computers this year.

Stock prices also closed sharply higher on London’s Stock Exchange, propelled by a burst of buying when a new two-week trading account opened. The Financial Times 100-share index was up 25 points, or 1.1%, at 2,283.9 at the close.

CREDIT Bond Prices Rise on Economic Signs

Bond prices posted small gains after a volatile session during which prices climbed on new signs of economic weakness and fell on worries that the Japanese may start issuing dollar-denominated securities.

The benchmark 30-year Treasury bond rose 1/8 point, or about $1.25 per $1,000 in face value. Its yield slipped to 8.47% from 8.48% late Thursday.

Analysts said bond prices initially rose after the government released its durable goods report.

The 30-year bond rose more than 3/4 point, or $7.50 for every $1,000 in face value, on that news.

But Wood said prices lost ground after the news report that the Japanese government may be considering issuing dollar-denominated securities.

The report raised fears that the market would be unable to absorb the extra bond supply.

The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.25%, unchanged from Thursday.

CURRENCY Dollar Goes Higher Except Against Yen

The dollar was mostly higher in domestic and foreign trading but fell sharply against the yen as investors regained some confidence in the Japanese currency.

Analysts said a rise in interest rates in Japan and the Tokyo Stock Exchange’s recovery following a string of steep losses helped support the yen, which itself has fallen sharply in recent weeks.

Jack Barbanel, president of First Global Asset Management Inc., said traders believed that Japanese yields would go even higher, which would make the yen even more attractive.

The dollar fell to 154.30 yen in New York from 155.095 late Thursday. In Tokyo early Friday, the dollar rose 0.24 yen to a closing 155.07 yen, and in London, it was quoted at a sharply lower rate of 153.85 yen.

COMMODITIES Gold Futures Fall in Heavy Selling

Gold futures prices tumbled to 4 1/2-month lows Friday on New York’s Commodity Exchange amid heavy European selling as the dollar resumed its advance against most other major currencies.

On other commodity markets, silver also retreated; grains and soybeans fell; energy future advanced, and livestock and meat futures were mixed.

Gold futures settled $5.30 to $5.60 lower, with the contract for delivery in April at $389.40 an ounce, the lowest settlement for a near-month gold contract since Nov. 10.

Silver futures ended 4.1 to 4.7 cents lower in New York, with March at $5.043 an ounce.

Analysts said buying interest in gold has faded as prices have skidded from near $430 an ounce over the past six weeks. April gold fell by $11.50 in this week alone.

Gold is traded in dollars on the world market, so a stronger dollar makes the metal more expensive in terms of other currencies, discouraging foreign buying.

But analysts said gold’s decline in the face of global political and economic uncertainty suggests other factors are also at play.