Stocks Caught in Dollar’s Tow; Dow Off 22.42

The stock market sustained a broad loss Monday as the dollar fell in foreign exchange and interest rates rose.

Trading set its slowest pace in more than 2 1/2 months.

The Dow Jones index of 30 industrials dropped 22.42 to a five-week low of 2,659.19.

Declining issues outnumbered advances by more than 2 to 1 in nationwide trading of New York Stock Exchange-listed stocks, with 445 up, 1,031 down and 487 unchanged.

Big Board volume totaled 121.13 million shares, down from 133.35 million Friday and the lightest total since a 68.87-million-share day on July 3.

Nationwide, consolidated volume in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 148.51 million shares.

The dollar lost ground against leading foreign currencies after officials of the Group of Seven industrialized countries issued a statement over the weekend declaring recent strength in the U.S. currency undesirable.

That sent interest rates higher in the credit markets. Prices of long-term government bonds fell about $10 for each $1,000 in face value, raising their yields to the 8.29% to 8.35% range.

Analysts said that dampened interest in stocks at a time many investors were already concerned that the market was due for a “correction” after its sharp rise during the first eight months of the year.

Columbia Pictures Entertainment led the active list, up 5 1/4 at 26 3/8 on a report that Sony Corp. was offering to acquire the company, including the 49% interest in it held by Coca-Cola. Coca-Cola shares rose 5/8 to 63.

Sony, meanwhile, gained 1 3/8 to 59 1/2. Other Japanese issues turning in a strong showing included Matsushita Electrical, up 4 7/8 at 164, and Kyocera, up 5 1/2 at 79 1/4.

Losers among the blue chips included Philip Morris, down 2 1/8 at 155 1/2; Procter & Gamble, down 1 1/8 at 118 3/4; Exxon, down 5/8 at 44 3/4; General Motors, down 1/2 at 47 1/8, and American Telephone & Telegraph, down 1 at 42 1/8.

In Tokyo, stock prices rose in thin trading. The Nikkei average of 225 selected issues, which gained 26.77 on Friday, added 188.92 to close at 34,960.71.

In London, stock prices closed broadly lower in light trading Monday. The Financial Times-Stock Exchange 100-share index slipped 10.6 to 2,359.6.

Credit

Bond prices fell sharply. The Treasury’s benchmark 30-year bond was off 1-1/32 point, or more than $10 per $1,000 face amount. Its yield increased to 8.28% from 8.19% late Friday.

It was the biggest daily decline for the long bond since mid-August.

In the secondary market for Treasury bonds, prices of short-term governments fell 1/4 point, intermediate maturities fell more than 1/2 point and long-term issues were down roughly 1 point, according to Telerate Inc., the financial information service.

Interest rates on short-term Treasury securities rose in Monday’s auction to the highest level in three weeks. The Treasury Department sold $7.4 billion in three-month bills at an average discount rate of 7.72%, up from 7.64% last week. Another $7.4 billion was sold in six-month bills at an average discount rate of 7.79%, up from 7.64% last week.

In the secondary market, yields on previously issued three-month Treasury bills rose to 8.06% as the discount rose 5 basis points to 7.81%. Yields on previously issued six-month bills rose to 8.25% as the discount rose 9 basis points to 7.83%. Yields on one-year bills rose to 8.32% as the discount rose 9 basis points to 7.73%.

The federal funds rate, the interest on overnight loans between banks, was quoted at 9.50%, up from 8.9375% late Friday.

Commodities

Prices of cotton futures made strong gains on the New York Cotton Exchange after a chilly night in the South threatened further damage to a crop already badly battered by inclement weather.

On other markets, copper futures fell, gold and platinum rose, energy futures advanced, grains and soybeans were mixed, and livestock and meat futures were mixed.

Cotton futures settled 0.15 cent to 1.27 cents higher, with the contract for delivery in October at 73.15 cents an ounce.

Prices had surged the 2-cents-a-pound daily limit earlier in the session on reports of record-low temperatures overnight in the high plains of Texas and the Mississippi Delta region.

Cold temperatures temporarily halt the development of the cotton crop, which is rapidly maturing and in the early stages of the harvest.

The U.S. cotton crop has had a poor season, with too much rain in some areas and not enough in others. In a Sept. 12 crop report, the Agriculture Department projected this year’s harvest at 12.28 million bales, 20% below last year’s crop.

Copper futures prices fell sharply on New York’s Commodity Exchange on news of a larger-than-expected, 13,500-metric-ton increase in copper stocks registered with the London Metal Exchange.

Copper settled 2.6 to 2.85 cents lower, with September at $1.335 a pound.

Gold futures rose sharply on the Commodity Exchange and platinum futures posted strong gains on the New York Mercantile Exchange as the dollar weakened on international currency markets.

Most energy futures rose moderately amid jitters about an OPEC meeting in Geneva.

West Texas Intermediate crude oil settled 18 to 20 cents higher, with November at $19.46 a barrel; heating oil was 0.26 to 0.72 cent higher, with October at 57.51 cents a gallon; unleaded gasoline was 0.23 cent lower to 0.50 cent higher, with October at 61.67 cents a gallon.

Grain and soybean futures drifted to a mixed finish on the Chicago Board of Trade, where a lack of significant news kept the trading floor quiet and activity thin.

Frozen pork bellies fell sharply on the Chicago Mercantile Exchange amid profit taking.