Market Spurts in Late Trading; Dow Up 16.91

The stock market closed higher Wednesday, with prices reversing sharply in late trading after investors put aside concerns about renewed tensions in Central America.

Trading remained relatively quiet, however.

The Dow Jones average of 30 industrials, which sat for most of the day with a modest loss, closed up 16.91 at 2,064.32.

Advancing issues outnumbered declines by more than 5 to 3 on the New York Stock Exchange, with volume totaling 153.59 million shares, against Tuesday’s 133.17 million. The NYSE’s composite index gained 1.29 to 151.28.

Traders said bargain hunting late in the session accounted for a good deal of the day’s advance, which was enhanced by gains in airline and other transport stocks.

“Even though the market has been sliding a bit recently, it has shown evidence of underlying support, and that may have encouraged some bargain hunting,” said Robert Stovall, president of Stovall/Twenty First Advisors.

Central America Jitters

While the day’s volume was the most active this week, it was still relatively light on nervousness concerning political unrest in Panama and Honduras and ahead of the U.S. trade deficit for January, which will be released today.

Traders said that the market’s ability to shrug off potentially damaging news, such as reports that Nicaraguan troops had entered Honduras, enticed some investors, who were betting that the market would fall, to cover their short positions.

Some traders said they noted program activity late in the session, which may have been a result of unwinding positions ahead of Friday’s so-called Triple Witching Hour when index options, index futures and individual stock options simultaneously expire.

Takeover rumors continued to abound. Pillsbury, said variously to be a potential target for any of several financiers, gained 3 7/8 to 42 and led the active list on volume of more than 2.3 million shares.

In foreign trading, British stocks fell on fears that the strong pound would batter British exports in world markets, but share prices finished higher on many other European exchanges.

Tokyo stocks rose sharply as investors brushed aside fears that the U.S. trade report for January, due out today, would provoke a new round of dollar-selling and economic worries.

The Nikkei 225-share index climbed 228.76 points to 25,704.43, extending Tuesday’s small 42.16-point gain.

But London’s Financial 10-share index dropped 14.2 points to 1,825.7 as investors fretted that the benefits of lower tax rates announced on Tuesday might be offset by the pound’s strength.