STOCKS : Record Eludes Dow; Index Off 12.75

The stock market posted moderate losses Thursday, stumbling as interest rates blipped higher.

The Dow Jones industrial average slid 12.75 points to 3,013.86, after early in the day topping its record close of 3,035.33 set in June.

Declining issues narrowly outnumbered advances on the New York Stock Exchange, with 785 down and 763 up. Volume came to 163.89 million shares.

Despite the optimism earlier in the week when the Federal Reserve eased interest rates to help push the economy out of recession, Thursday’s action showed that many investors remain fearful. Some economists say another recession could be in the wings, just months after the last one ended.

Reflecting those concerns, “This rally has been anything but impressive,” said analyst Alfred Goldman at A. G. Edwards & Sons. He noted that despite the Dow’s 38-point rise Tuesday, a new record high has eluded it.

Still, other indexes, such as the Standard & Poor’s 500 index, did set new records this week, before falling back on Thursday. And despite the Dow’s slide, the NASDAQ composite index of small stocks rose Thursday.

The market seemed concerned by a mediocre reception for the Treasury’s sale of 30-year bonds Thursday. Today, both stock and bond markets await a report on July wholesale inflation. A low inflation report could signal another drop in interest rates.

Among the market highlights:

* Retailers were active as most reported sluggish July sales. (Story, D3.) Winners included Wal-Mart, up 3/4 to 48 7/8; Gap, up 3 to 39 1/4, and Penney, up 1 5/8 to 51 7/8. Losers were led by Woolworth, off 7/8 to 28 1/4 and Sears, off 5/8 to 41.

* Bank stocks turned mixed after a broad advance Wednesday. Citicorp fell 1/4 to 13 7/8 on reports of high withdrawals at its Hong Kong branches, apparently on solvency worries. But Wells Fargo added 2 5/8 to 72 1/4 as investor Warren E. Buffett got Federal Reserve permission to raise his stake to 22%.

* Oil stocks fell across the board. Chevron lost 1 1/8 to 70 7/8, Arco dropped 1 3/8 to 121 3/8 and Royal Dutch gave up 1 3/8 to 82 1/8.

* Tenneco gained 2 to 41 7/8. The natural gas pipeline stock continued to gain on the appointment of a new president. Meanwhile, Pacific Enterprises, parent of Southern California Gas, jumped 1 1/4 to 28 5/8 after it announced cost cuts.

* HAL, parent of beleaguered Hawaiian Airlines, plunged 2 to 6 7/8 after announcing plans to sell new stock. Chrysler slumped 1/4 to 12 1/2 after it set plans for a stock sale. Both firms may face trouble attracting investors as they compete with many stronger new stocks.

In London, the Financial Times Stock Exchange 100-share index rose to within 1.1 points of its record to finish up 3.2 points at 2,600.6. In Frankfurt, Germany, the DAX index lost 1.22 points to 1,630.21.

In Tokyo, the Nikkei average lost 208.56 points to 23,482.46.

In Mexico City, stocks slipped for the fourth straight day. The Bolsa index eased 1.31 points to 1,147.26.

Credit

Bond yields rose slightly as the government completed $38 billion in new bond sales begun Tuesday.

The Treasury sold $12 billion in 30-year bonds at an average yield of 8.17%, down from 8.21% at the last auction May 9.

The 30-year auction was viewed as a disappointment, and late in the day traders unloaded some bonds, driving the yield on existing 30-year issues to 8.23%.

The bond market had been bullish since the Fed moved Tuesday to lower interest rates. But a flood of new bond issues this week was more than the market could digest, traders said.

The federal funds rate, the rate banks charge on overnight loans, was quoted at 5.63%, down from 5.75% Wednesday.

Currency

The dollar rose in light trading amid concerns over interest rates and strife in the Middle East.

There was a flurry of buying on news that Turkey had begun new raids against Turkish Kurdish rebels in northern Iraq, but “it turned out to be not that big an event,” said one trader.

The dollar rose to 136.15 Japanese yen in New York from Wednesday’s 136.00. Against the German mark, the dollar closed at 1.714, compared to 1.710.

Commodities

Platinum tumbled amid growing pessimism about industrial demand for the metal.

Platinum futures settled $7.50 lower across the board on the New York Merc, with the October contract at $350.90, the lowest price of a near-term platinum contract since Feb. 4, 1986.

Silver followed platinum lower as September contracts lost 4.3 cents to $3.93 an ounce on New York’s Comex. The August gold contract rose 60 cents to $357.20.

Platinum’s selloff partly reflected worries about the world economy, and fears that the Japanese, who are big investors in platinum, will continue to liquidate precious metal assets in favor of cash, analysts said.

There was no market-moving news Thursday, but platinum traders have grown skittish because of developments in recent months that point toward lower demand for the metal.

Those factors include the development of automobile catalytic converters that substitute other metals for platinum. The auto industry accounts for about 40% of world platinum consumption.

Meanwhile, gasoline futures soared to their highest level of the summer on the New York Merc, lifting the rest of the energy market amid scattered reports of new refinery problems.

Wholesale unleaded gasoline for delivery in September settled at 68.70 cents a gallon, up 1.89 cents; light, sweet crude oil for delivery in September settled at $21.58 per barrel, up 22 cents.