FINANCIAL MARKETS : Currency : Dollar Drops; Gold Advances

The dollar fell in New York trading Thursday after closing higher in Europe as foreign exchange markets continued to digest last weekend’s agreement by major industrial nations to keep currency rates stable.

Gold prices edged higher in domestic trading after falling sharply overseas. Republic National Bank in New York quoted a late bid of $454.40 for an ounce of gold, up from $453.75 late Wednesday.

The dollar retreated in New York on technical factors after reaching the psychologically important level of 1.84 West German marks, said James Vick, a vice president with Manufacturers Hanover Trust Co.

Analysts in New York said traders were still assessing the industrial nations’ agreement to stabilize currency rates.

There was some question among traders whether the countries--the United States, Japan, Britain, West Germany, France, Italy and Canada--would defend the dollar at its current levels, Vick said.

However, James McGroarty, a vice president at Discount Corp., said the market had “more of a feeling again that any further decline (in the dollar) would be considered counterproductive” by the industrial nations.

In Europe, dealers said traders were growing more confident about the agreement.

Late dollar rates in New York, compared to late Wednesday, included: 1.83975 West German marks, down from 1.8449; 1.53125 Swiss francs, down from 1.5375; 6.13095 French francs, down from 6.1430; 1,327.875 Italian lire, down from 1,330.375, and 1.30675 Canadian dollars, down from 1.31055.

Late dollar rates in Europe, compared to late Wednesday, included: 1.8470 West German marks, up from 1.8430; 1.5368 Swiss francs, up from 1.5335; 6.1360 French francs, up from 6.1355; 2.0745 Dutch guilders, up from 2.0690; 1,332.00 Italian lire, up from 1,327.25, and 1.3070 Canadian dollars, down from 1.3095.

The British pound edged down in London to $1.6170 from $1.6285. In later New York trading, the pound slipped to $1.62225 from $1.6242.

The dollar rose in Tokyo for an eighth consecutive day, closing at 146.77 Japanese yen, up from Wednesday’s close of 146.35 yen. In later London trading, the dollar traded at 146.84 yen. And in New York, the dollar slipped to 146.325 yen from 146.60.

Gold prices fell more than $5 an ounce in overseas trading--matching a sharp decline in New York on Wednesday--but edged higher in Thursday’s New York transactions.

The precious metal closed in Zurich at $453.50 an ounce, down $6 from Wednesday’s close. Gold was quoted in late trading in London at $453.75, down from $459. Earlier, the metal fell in Hong Kong to $455.03, down from $460.03.

On the Commodity Exchange in New York, gold rose to $454 from $452.70.

Silver bullion fell in London to $7.55 an ounce from $7.66.

On the Commodity Exchange, silver closed at $7.535, up from $7.500.

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