FINANCIAL MARKETS : Early Rally Loses Steam; Dow Off 2.94

Blue chip stocks shot up Friday morning, buoyed by news of slower job growth last month, but later lost the rally on a wave of program selling amid fears of a possible recession.

The Dow Jones industrial index closed down 2.94 points at 2,381.96, ending the week with a 36.84-point loss and extending a losing streak to six days. But the broader market ended higher. Advances led declines 796 to 609 in active New York Stock Exchange volume of 180.81 million shares. Volume was 816.24 million shares for the week.

Stocks took off from the opening bell, gaining as much as 30 points after the government said the jobless rate rose to 5.3% last month from March’s 15-year low of 5%.

Investors initially welcomed the report’s implication that the economy may be cooling and easing upward pressure on inflation and interest rates, but anxiety set in as the market grappled with fears of an impending recession.

Investors became apprehensive in the final hour of trading, selling in futures-related computer programs and taking profits ahead of the weekend, traders said.

In London, stocks set a post-crash closing high as active new-account buying and a strong rise on Wall Street gave the market confidence. The Financial Times 100-share index finished 13.8 points, up at 2,132.8, compared to the previous closing high of 2,125.4 on March 14.

Bond prices, meanwhile, rallied after the the employment report showed that non-farm business payrolls expanded by only 117,000 jobs in April, the weakest showing since a drop of 92,000 jobs in June, 1986. The news gave bond investors hope that the Fed might loosen the reins on interest rates.

The Treasury’s bellwether 30-year bond rose 3/8 point, or $3.75 per $1,000 face amount. Its yield, which moves in an opposite direction from price, fell to 8.95% from 8.99% late Thursday.

The dollar spurted higher in worldwide trading despite waves of concerted central bank intervention and the employment report.

As the currency pushed against the level of 1.90 West German marks, the Fed, joined by West Germany’s Bundesbank and other European central banks, began the first rounds of dollar-selling.