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Stocks Drift in Mixed Session; Dow Up 1.46

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From Times Wire Services

Stock prices drifted in a narrow range Wednesday, registering no immediate verdict on President Reagan’s tax-reform proposal.

The Dow Jones average of 30 industrials, down about 3 points for most of the session, closed with a 1.46 gain at 1,302.98. Other indicators showed mixed results.

Volume on the New York Stock Exchange increased slightly to 96.54 million shares from 90.60 million on Tuesday.

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Analysts said there were potential pluses for stocks in the plan to overhaul the tax system that was outlined Tuesday night by the President.

In particular, they noted, Reagan called for continued favorable treatment for long-term capital gains on stocks and a 10% deduction for corporations on dividends that they pay. That partial break might encourage companies to increase their dividend pay-outs in the future.

Neither of these proposals came as any great surprise to Wall Street, however. In addition, brokers pointed out that the debate on tax reform has just formally begun. Many uncertainties remain about what final form any legislation passed by Congress might take.

“It is going to take a long time before a tax reform as drastic as this one is becomes the law of the land,” observed Newton Zinder at E. F. Hutton.

Tax proposal or no, market watchers said, stock prices lately have climbed to levels where some traders find the temptation strong to sell to take profits. But some observers said that, since the Dow Jones industrials broke through 1,300 early last week, that round-number figure has shown signs of becoming a short-term “support level” for the market.

CBS stock rose as much as 4 points before closing at 114 7/8, up 2 3/8, on speculation that the company will soon take action to fight a takeover bid by broadcaster Ted Turner. Volume was 581,900 shares.

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Speculation centered on the possibility that CBS is about to begin a stock repurchase plan--an option that the company listed in a recent filing with the Securities and Exchange Commission--or that Gannett Co. would join CBS to fight Turner’s attempt to acquire CBS. A spokesman for Gannett, however, denied that there are any pending plans for a business combination, and a CBS spokeswoman said there is no pending corporate announcement that would explain the stock activity.

Robert Ladd, an analyst for Duff & Phelps, noted that a large-scale repurchase of CBS stock at a premium over the market price would “signal investors and analysts that management is willing to do something good for shareholders as opposed to some of the stupid things that have been done in the past to fight takeovers.”

Trans World Airlines jumped 1 1/8 to 18 7/8 in active trading. On Tuesday, the company said it would seek a friendly merger partner in an effort to ward off an $18-a-share takeover bid by financier Carl C. Icahn.

Transworld Corp., a separate entity from TWA since it spun off the airline last year, climbed 1 5/8 to 38. It announced Tuesday that it planned to repurchase some of its stock and to seek a buyer for its Century 21 Real Estate subsidiary.

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