FINANCIAL MARKETS : Stocks Again Hit Post-Crash High; Dow Up 4

Stock prices climbed again Tuesday to another post-crash high as the Dow Jones industrial index finished just under the 2,700 mark in active trading.

The Dow index of 30 industrials rose 4.18 points to 2,699.17, just 23.25 points short of the record closing high of 2,722.42 it reached on Aug. 25, 1987.

The slight increase followed a surge of 41.54 points Monday.

After rising well above 2,700, the Dow retreated broadly in an afternoon selloff that analysts termed a normal and measured reaction to the run-up a day earlier. The market regained some ground in the last 30 minutes of trading.

“I think it was healthy we held yesterday’s gains without a back-off, particularly when you’re near a psychological level,” said Edward P. Nicoski, a technical analyst with Piper, Jaffray & Hopwood Inc. in Minneapolis.

“There’s been no panic selling even though we’ve been near this level,” he said.

The Dow index’s flirtation with the 2,700 level has resurrected fears from two years ago, when the market’s historic highs reached in August were shattered two months later in the worst crash in history. The Black Monday panic of Oct. 19, 1987, has made many investors cautious.

Good performances among select blue chip stocks and takeover-related news in the airline industry paced Tuesday’s gains.

UAL rose 8 1/2 to 219 1/4 after soaring 46 1/2 Monday, when the company disclosed it received a buyout offer from investor Marvin Davis.

The strength trickled over to other airlines, with AMR up 2 3/8 to 73 5/8, Delta gaining 2 1/4 to 76 3/4 and Pan Am up 1/4 to 4 1/4 in heavy trading. Midway jumped 1 1/2 to 20 1/2 after Ampco-Pittsburgh Corp. disclosed it had acquired a 6.6% stake in the company.

Advancing issues outnumbered declines by about 8 to 7 in nationwide trading of New York Stock Exchange-listed stocks, with 834 up, 688 down and 496 unchanged.

Big Board volume totaled 200.34 million shares, up from 169.75 million in the previous session. Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 237.89 million shares.

Tokyo stocks rebounded to close higher for the first time in four trading days. The Nikkei index of 225 selected issues rose 129.10 to close at 34,759.48.

Share prices ended higher on London’s Stock Exchange. The Financial Times-Stock Exchange 100-share index ended up 6.6 at 2,348.1.

Credit

Bond prices finished mixed as the Treasury completed the first part of its quarterly securities auction and traders braced for more episodes in this week’s $44.5-billion borrowing binge.

The Treasury’s bellwether 30-year bond fell 1/8 point, or about $1.25 for every $1,000 in face value, while its yield stayed at about 8.08%. But some shorter-term Treasury issues edged higher and corporate and tax-exempt issues posted some tiny gains.

Analysts said many traders were standing aside to see how the Treasury’s sale of new securities goes this week.

In the first leg of its three-part auction to refinance debt, the Treasury sold $10 billion in three-year notes for an average yield of 7.93%.

That was the lowest level for an auction of three-year notes since they were sold at an average yield of 7.42% on Feb. 2, 1988.

The federal funds rate, the interest on overnight loans between banks, was quoted late in the day at 8.9375%, up from 8.875% on Monday.

Currency

The dollar drifted lower against all major foreign currencies in listless trading.

Gold prices firmed. On the Commodity Exchange in New York, gold bullion for current delivery rose to $366.20 an ounce from $365.90 late Monday. Republic National Bank of New York said the late bid for gold was $365.70, up 50 cents.

Currency dealers said profit taking following a moderate advance on Monday helped push the dollar lower, but trading was light in the absence of any market-moving news and because many traders were on vacation.

In Tokyo, where trading ends before Europe’s business day begins, the dollar fell 0.53 Japanese yen to a closing 139.25 yen. It fell to 138.75 yen in London, and to 138.86 yen in New York, down from 140.05.

In London, it cost $1.6250 to buy one British pound, compared to $1.6075 late Monday. Sterling fetched $1.6255 in New York, up from $1.5980.

Gold traded late in London at $365.45 an ounce, down 30 cents from Monday. In Zurich , Switzerland, the late bid was $365.85, up from $365.40.

Earlier, in Hong Kong, gold fell $1.18 to close at $367.28.

Silver prices were mixed. On New York’s Comex, silver bullion for current delivery rose to $5.156 an ounce from $5.128. But silver fell in London to $5.16 from $5.18.

Commodities

Cotton futures prices made an abrupt about-face, surging to the upper reaches of the daily trading limit after falling nearly their daily limit in the previous session.

On other markets, soybeans suffered big losses after a wave of selling near the close, and crude oil futures broke back above the $18-a-barrel plateau.

The sharp price swings in cotton appeared to reflect uncertainty about the size and quality of the crop in advance of an Agriculture Department crop production report due out this week.

Traders speculated that extremely dry conditions in Texas may have lowered the yield there, while unusually wet weather throughout the growing areas of the Delta during the spring and summer is believed to have adversely affected much of the crop there.

Cotton settled 1.86 cents to the limit--up 2 cents higher on the New York Cotton Exchange, with the contract for delivery in October at 74.80 cents a pound.

Grain futures prices eased slightly, but soybean prices absorbed a more direct hit on the Chicago Board of Trade.

Wheat settled 3.5 cents lower to unchanged, with September at $3.915 a bushel; corn was 1.25 cents lower to 0.5 cent higher, with September at $2.2425 a bushel; oats were 3 cents to 1.5 cents lower, with September at $1.36 a bushel, and soybeans were 9 cents to 18 cents lower, with August at $5.925 a bushel.

Crude oil futures, at $20 a barrel three weeks ago, had been trending downward since. But the price climbed above $18 and held the line Tuesday at the New York Mercantile Exchange, pulling the products along.

“I’d call $18 more a psychological support level than anything else, but the trade tends to rally on round numbers,” said Jim Ritterbusch of Carson Petroleum Co., Chicago.

Livestock futures were mixed, but pork futures were mostly lower on the Chicago Mercantile Exchange.

Precious metal futures finished mostly higher in the wake of a weakening U.S. dollar.