Financial Markets : Dow Rises 8.34 to 2,687.97, a 3.98 Gain for Week

NEW YORK — Wall Street’s blue chips rose modestly Friday, helped by a late burst of computer-directed buying, while transportation issues surged on takeover fever to end the week at record levels.

The Dow Jones index of 30 industrials rose 8.34 points to finish at 2,687.97, a gain of 3.98 points on the week.

Once again, the market’s biggest gains were concentrated in the transport sector. The Dow Jones transportation average jumped 14.05 points to a record 1,442.39, helped by speculation that a bidding war may emerge for UAL Corp., the parent of United Airlines.

Volume on the floor of the Big Board totaled 145.81 million shares, down from 157.56 million in the previous session.

Advancing issues outnumbered declines by about 7 to 6 in nationwide trading of New York Stock Exchange-listed stocks, with 776 issues up, 661 down and 544 unchanged.

Stocks opened weaker in response to a slide in the bond market after a Labor Department report on consumer prices that raised concern about the inflation outlook over the next few months.

The Labor Department’s consumer price index rose 0.2% in July, in line with the market consensus. But without food and energy costs, the most volatile components of the index, consumer prices rose a heftier 0.4%, raising inflation worries.

Stocks firmed slightly at midday as bonds turned higher and by late afternoon prices were strengthening.

But uncertainty about the impact of the the so-called double witching hour--the expiration of stock-index futures and options that don’t expire quarterly--dampened the rally.

Reports that at least three parties are interested in acquiring UAL pushed up the airline company’s stock 4 5/8 to 271. Besides Marvin Davis, who has bid $275 a share for UAL, rumored potential suitors include Texas investor Robert M. Bass and another group that includes Morgan Stanley & Co. and British Airways.

Other airlines benefited from the takeover talk. AMR rose 3/8 to 76 1/8, Delta Air Lines gained 1 3/4 to 77, USAir added 1/8 to 50 5/8 and Texas Air rose 1 3/8 to 19 1/2.

McGraw-Hill rose 6 to 85 1/2 on renewed speculation that it may be the target of a takeover or leveraged buyout. The company declined to comment on the rise in its stock.

C. R. Bard fell 1 1/2 to 20 after the company said it had stopped shipments of its new Probe angioplasty catheter pending Food and Drug Administration review and approval.

Bard said it expects that the development will cut into its profits, leading several brokerage firms, including Prudential-Bache, Shearson Lehman and Piper Jaffray, to lower their annual earnings estimates for the company.

Sci-Med Life, which also makes catheters, benefited from Bard’s troubles. Its shares jumped 12 1/8 to 48 1/8.

Georgia-Gulf climbed 3 1/2 to 54 1/2 on news that investor Harold Simmons, who owns about 9.4% of the company, is considering seeking control.

Maytag rose 1 3/4 to 23 1/4 on a report that it may be a takeover target. Analysts said Chicago businessman Lester Crown, who owns a 5.5% stake in Maytag, is rumored to be planning to buy more shares.

The Tokyo stock market took a breather, closing mixed in thin trading, after jumping to record highs earlier this week. The key Nikkei 225-share index dipped 26.97 points to close at 35,063.14.

In London, share prices continued climbing, as bullish corporate news, encouraging economic data and scattered speculative buying pushed the main index to a 1989 high. The Financial Times 100-share index closed 15.1 points higher at 2,375.1.

Credit

Bond prices finished mixed as buying by bargain hunters offset the early declines that followed the consumer inflation report.

Prices of long-term Treasury and corporate bonds edged up, but prices of shorter-term Treasury issues and tax-exempt bonds slipped.

The price of the Treasury’s benchmark 30-year bond rose 1/16 point, or less than $1 for every $1,000 in face value, as its yield dipped to 8.15% from 8.16% late Thursday.

In the secondary market for Treasury bonds, prices of short-term issues lost 1/8 point, intermediate securities fell 3/32 point and long-term issues rose as much as 3/32 point, according to figures provided by Telerate Inc., a financial information service.

The federal funds rate, the interest on overnight loans between banks, was quoted at 8.875%, unchanged from late Thursday.

Currency

The dollar slipped in worldwide trading as dealers cashed in on the currency’s dramatic run-up in the previous session.

Gold prices were mixed. On the Commodity Exchange in New York, gold bullion for current delivery lost 20 cents to finish at $368.10 an ounce. Republic National Bank of New York said gold was bid later at $366 an ounce, down 20 cents from Thursday.

Buying interest in the dollar abated following the climb triggered by Thursday’s release of a better-than-expected U.S. trade report for July, which boosted the U.S. currency to levels not seen since its most recent rally in June.

“The dollar is right back to where we were before the trade number came out,” said Michael McDonald, a trader with Harris Trust & Savings Bank in Chicago.

Currency traders characterized the Labor Department’s consumer price index report a non-event since it was largely within expectations.

Earlier in Tokyo, the dollar closed at 143.52 Japanese yen, up from 142.32. Later in London, the dollar traded lower at 142.75 yen. In New York, the dollar closed at 142.60 yen, down from 143.53 yen on Thursday.

In London, one British pound cost $1.5655 late Friday, more expensive for buyers than Thursday’s late $1.5590. In New York, one pound cost $1.5659, more expensive than $1.5605 on Thursday.

Gold prices were higher overseas. In London, gold closed at $366.65 bid an ounce, up from $366.35. The Zurich closing price was $366.75, up from $365.25. Earlier in Hong Kong, gold closed at $366.50 bid, up from $366.45.

Commodities

Profit taking put an end to a seven-day run-up in copper futures prices Friday on New York’s Commodity Exchange but chart-watchers said technical signals pointed toward further gains.

“This might actually help,” analyst Stephen Platt of Dean Witter Reynolds Inc. said of the moderately steep decline. He said the market had fallen back to prices it had skipped over on its way up and cited a theory that markets must fill such gaps before resuming a trend.

On other futures markets Friday, futures prices for energy, grains, soybeans, livestock and meat were mixed.

Copper settled 1.50 cents to 2.35 cents lower, with the contract for spot delivery at $1.2465 a pound and the more actively traded September contract at $1.2390.

Spot prices had climbed as high as $1.2680 on Thursday, which represented a gain of more than 15% since Aug. 8.

The rally had been linked to indications that production problems, including ongoing miner strikes in Canada and Peru, were beginning to make a dent in copper stockpiles.

Analysts said Friday’s decline was largely due to profit taking after the nearly vertical run-up.

Platt said prospects for a settlement of the five-day-old Peruvian strike appeared to be improving. He said the miners must return to work to qualify for wage bonuses and some observers believe those bonuses are enough incentive to bring the strike to an end.

But both Platt and Peter Cardillo, commodities trading adviser with Josephthal & Co., said the market continued to look strong from a technical perspective.

Wheat and corn futures prices retreated on confirmation of large foreign purchases of those grains while soybean futures closed higher following a private forecast for a surprisingly small crop.

Memphis-based Sparks Commodities Inc. pegged the U.S soybean crop at 1.84 billion bushels compared to the Agriculture Department’s estimate last week of 1.91 billion, and Sparks pegged the corn crop at 7.05 billion bushels compared to the USDA’s projected 7.35 billion.

Wheat settled 1.5 cents to 5 cents lower, with September at $3.9225 a bushel; corn was unchanged to 1.25 cents lower, with September at $2.3475 a bushel; oats were unchanged to 1.25 cents higher, with September at $1.3825 a bushel, and soybeans were 4.25 cents lower to 7.75 cents higher, with August at $6.1575 a bushel.

Reports of a gasoline refinery shutdown in Venezuela boosted gasoline futures prices on the New York Mercantile Exchange.