Steadying Dollar Fuels Rally Led by Blue Chip Stocks; Dow Rises 13.51

Steadiness in the dollar after a recent prolonged decline helped stocks post their best performance in two weeks Thursday, with blue chips and takeover stocks posting solid gains.

The Dow Jones average of 30 industrials ended 13.51 points higher at 2,170.34 after rising gradually through most of the session. The widely watched indicator had been up more than 21 points an hour before the close but then gave some ground.

Much of the gain in the Dow average was attributed to a surge in component Sears, Roebuck.

Sears shares soared 3 to 46, driven by unconfirmed rumors that investor Ronald O. Perelman is poised to make a bid for the giant retailer. Sears announced a major restructuring on Monday.

In the broader market, advancing issues outpaced declines by about 4 to 3 in nationwide trading of New York Stock Exchange-listed issues.

Stocks have come under some pressure from the dollar’s persistent decline in recent days, which has raised fears that the Federal Reserve could bolster the currency by nudging interest rates higher.

The dollar stabilized in foreign-exchange trading Thursday, giving a lift to stock prices. The U.S. currency was quoted late in New York at 124.68 Japanese yen, up from 124.40 yen late Wednesday.

“The tone seems to be better,” said Jack Baker, the head of block trading at Shearson Lehman Hutton Inc.

“There’s about a third of the Dow stocks performing well enough to engrave some recent new highs on the market,” said analyst Eugene Peroni of Janney Montgomery Scott.

“Once again, takeover-related buying in a small sector of stocks helped boost the Dow,” added Robert Walberg, technical analyst at MMS International. “But the Dow has been much stronger than the broader market,” he added.

Bond prices also benefited from the dollar’s recovery, which gave additional support to the stock market, analysts said. Another positive factor was a decline in prices of gold and other key commodities, which calmed inflationary fears.

Market watchers noted, however, that activity continued to be dominated by professional traders, with many institutional investors staying on the sidelines.

Through most of this week, trading has been dampened by the market’s anticipation of upcoming events, notably today’s release of U.S. unemployment data for October and the presidential election next Tuesday.

Some of the lift Thursday also could have come from stock purchases by traders not wanting to be caught short when the unemployment data is published, he suggested.

Volume on the floor of the NYSE came to 152.98 million shares, down from 161.30 million Wednesday.

The NYSE’s composite index of all its listed common stocks edged up 0.08 to 157.08.

Sears was the most actively traded issue on the NYSE. Among other active issues on the exchange, RJR Nabisco rose to 87, AT&T; was unchanged at 28 3/4, Bank of America gained 3/8 at 19 and K mart advanced 5/8 to 37.

Kraft lost at 103; General Electric was down 3/8 at 44; Merck slipped 1/8 to 58 7/8, and Ford Motor declined 7/8 to 50 1/2.

Macmillan Inc. closed up 5/8 to 90 1/8 as the publisher’s board backed Maxwell Communication PLC’s $90.25-a-share bid for the company. Kohlberg Kravis Roberts & Co. said it was bowing out of the bidding after losing a key court battle on its offer Wednesday.

Holly Farms shares rose 1 7/8 to 54 3/4. The poultry firm rejected a $52-a-share bid from Tyson Foods Inc., but investors speculated that a higher offer would emerge.

Jepson Corp. shares fell 2 3/4 to 7 1/8 after it rejected a $227.2-million management-led bid saying it was no longer for sale.

At the American Stock Exchange, the market-value index was down 0.03 at 299.80.

Standard & Poor’s industrial index rose 0.16 to 321.51, and S&P;’s 500-stock composite index was up 0.14 at 279.20.

The NASDAQ composite index for the over-the-counter market advanced 0.99 to 382.77.

The Wilshire index of 5,000 equities closed at 2,748.738, up 1.425 points.

In foreign trading, Japanese markets were closed for the Culture Day public holiday.

In London, share prices finished lower Thursday in moderate trading amid a lack of buying. The Financial Times 100-share index closed off 5.6 points at 1,837.6.