Bond Prices Little Changed; Dollar Drops

Bond prices finished little changed Wednesday in more subdued dealings as the stock market stabilized, the dollar fell and attention focused on an impending supply of new issues.

The Treasury’s benchmark 30-year bond finished with a gain of 1/32 point, or about 30 cents for every $1,000 in face amount. Its yield held at 8.03%, unchanged from late Tuesday.

Analysts said bond prices rose as much as $5 for every $1,000 in face value early in the session because of worries that the potential economic consequences of the California earthquake would send stock prices sharply lower.

Stocks opened lower but quickly recovered, and the Dow Jones industrial average finished with a gain of nearly 5 points on the day.

As stocks recovered, bond prices relinquished some of their gains.

“The bond market is still taking its cues from stock market fluctuations, and I expect that will continue for awhile,” said Mickey Levy, chief economist for First Fidelity Bancorporation of Lawrenceville, N.J.

He said bond traders feel that if stocks fall sharply, the Federal Reserve is likely to encourage lower interest rates, a positive development for bonds.

Currency

The dollar ended weaker against key foreign currencies after a mixed performance overseas, with the Bay Area earthquake registering only a slight influence on foreign exchange markets.

Currency dealers said the dollar sank in overnight trading on news of the earthquake, but it regained some ground on the strength of the U.S. stock market.

Robert Ryan, senior currency trader for the Bank of New York, said an unconfirmed report that the Federal Reserve moved to buy dollars early in trading also helped support the dollar. However, most dealers dismissed the rumor.

Traders said the market was awaiting today’s release of consumer price index figures for September, hoping they would shed more light on the direction of the economy and inflation.

In Tokyo, where trading ends before Europe’s business day begins, the dollar fell to a closing 142.10 Japanese yen from 142.25 yen Tuesday. It traded at 141.40 yen in London and New York, compared to 142.70 in New York on Tuesday. The dollar was lower against the British pound. Sterling bought $1.5880 in London, up from $1.5835 late Tuesday. In New York, the pound was worth $1.5922, up from $1.57575.

Commodities

Copper futures prices slipped to their lowest point this month on New York’s Commodity Exchange, and some experts said the market’s four-month rally may be weakening.

On other commodity markets, precious metals advanced, energy futures retreated, grains and soybeans were mixed, livestock and meat futures were mixed and stock-index futures rose.

Copper futures settled 0.40 cent to 2.85 cents lower, with the contract for December delivery at $1.2645 a pound, its lowest close since Sept. 29.

Some technical analysts interpreted the break below $1.27 as an indicator of further losses to come, while fundamental analysts cited significant changes in supply-and-demand factors.

Chief among them was a report that the Mexican government is nearing agreements with labor on terms for reopening the Cananea copper mining and processing center, which closed Aug. 21 due to alleged financial mismanagement.

The mine is capable of producing 160,000 tons of copper annually, about 3% of the world’s total copper output.

In precious metals trading on the Comex, gold settled $1.30 higher across the board, with October at $368.70 an ounce; silver was 0.2 to 0.4 cent higher, with December at $5.16 an ounce.

Energy futures ended lower on the New York Mercantile Exchange in technically inspired selling after gaining initially on supply fears linked to the California earthquake.

West Texas Intermediate crude oil settled 10 to 20 cents lower, with November at $20.56 a barrel; heating oil was 0.29 to 0.54 cent lower.