FINANCIAL MARKETS : STOCKS : Employment Report Makes Dow Slip 12.84

Stock prices fell in thin trading Friday, hurt by robust government employment data for February that appeared to reduce the possibility of a cut in interest rates any time soon.

The Dow Jones index of 30 industrials slipped 12.84 to 2,683.33, cutting its gain for the week to 22.97 points.

Declining issues outnumbered advances in nationwide trading of New York Stock Exchange-listed stocks, with 602 up, 876 down and 484 unchanged.

Big Board volume came to 150.41 million shares, down from Thursday’s 170.90 million.

The Labor Department reported that the civilian unemployment rate held steady at 5.3% in February, while non-farm payroll employment swelled by 372,000 on top of an upward-revised increase in January.

The pace of job growth substantially exceeded advance estimates, suggesting that the economy had regained more momentum than many analysts had thought.

That was interpreted as a plus for the outlook for corporate profits, which have been weak lately.

But brokers said it also raised new worries about upward pressure on interest rates and seemed to dim whatever chances might have existed for any easing of the Federal Reserve Board’s credit policy.

“Expectations that the Federal Reserve would begin to loosen (credit) faded at the announcement,” said Charles Jensen of MKI Securities.

Traders described Friday’s decline as a pause after its recent climb. “I didn’t see a lot of institutional selling,” said Jack Baker, head of the equity block trading desk at Shearson Lehman.

Stocks were led by the dollar this week, which hit a three-year high against the Japanese yen and gained strongly against the West German mark. The dollar’s level serves as a barometer for foreign interest in U.S. assets.

But the wind went out of Wall Street’s sails Friday, when the bond market dived on the surprisingly strong February employment report.

NCNB fell 2 1/8 to 41 1/2. The company said it might see an increase of as much as 25% in its problem loans during the first quarter of the year.

Among actively traded blue chips, International Business Machines dropped 1/2 to 106 1/2; American Telephone & Telegraph fell 3/4 to 41; Philip Morris dropped 7/8 to 37 1/4, and General Electric lost 3/8 to 62 5/8.

Gap Inc., which chalked up one of the strongest gains among retailers announcing February sales results on Thursday, rose 21/4 to 61 1/2, a new 52-week high.

General-merchandise retailing issues finished mixed. Sears, Roebuck was unchanged at 41 1/4; K mart rose 1/8 to 34, and J. C. Penney dropped 1/2 to 68 3/8.

Hilton Hotels rose 7/8 to 51 1/2, rebounding from a 10 3/8-point slide Thursday after the company ended its quest for a possible acquirer, saying it hadn’t received any suitable offers.

In foreign trading, stock prices on the Tokyo Stock Exchange rallied further in moderate trading. The key Nikkei 225-share index, which advanced 328.55 points Thursday, gained 302.23 points to close at 33,993.12.

In London, domestic political concerns and lower early Wall Street prices dragged stocks lower. The Financial Times 100-share index closed off 15.7 points at 2,234.3.

CREDIT Bond Prices Tumble in ‘Foxhole’ Trading Bond prices fell sharply, knocked down by the news of strong employment growth in February.

The Treasury’s closely watched 30-year bond tumbled 3/4 point, or $7.50 for every $1,000 in face value. Its yield, which rises when the price falls, surged to 8.62% from 8.55% late Thursday.

Analysts attributed the market’s weakness to the employment report. After the report was released in the morning, “it was put your helmet on and get in the foxhole,” said John Sebastian, executive vice president of Clayton Brown & Associates in Chicago.

The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.313%, unchanged from late Thursday.

CURRENCY Dollar Goes Higher as Gold Prices Slip The dollar moved mostly higher in quiet trading on world markets, bolstered by a better-than-expected U.S. employment report.

Gold prices slipped worldwide. On the New York Commodity Exchange, gold settled at $399.80 an ounce, off 20 cents from Thursday. Republic National Bank of New York later quoted a bid of $399.75 an ounce, down 5 cents.

Despite the bullish sentiment surrounding the dollar, Marc Chandler, an analyst at MMS International in Chicago, noted that the fear of central bank intervention prevented the currency from rising further. Several central banks stepped in to sell dollars in European trading, but they did not follow through in domestic markets.

The pound lost nearly 2.5 cents amid anxiety over recent demonstrations against a new tax imposed by city halls across Britain. In addition, opinion polls show that the popularity of the Conservative government and of Prime Minister Margaret Thatcher is at an all-time low as inflation rises and interest rates remain high.

Earlier in Tokyo, the dollar rose to 151.15 Japanese yen, from Thursday’s 150.83 yen. Later in London, the dollar closed at 151.32 yen. In New York, the dollar closed at 151.27 yen, up from 151.09 yen on Thursday.

In London, one British pound cost $1.6183 late Friday, cheaper for buyers than Thursday’s late $1.6427. In New York, one pound cost $1.6170, less expensive than $1.6385 on Thursday.

COMMODITIES Coffee Futures Sink on Brazil Rumors Coffee futures tumbled on speculation that Brazil was ready to pour more of its crop on the world market.

In other futures markets, soybeans and corn rose while energy products, gold and pork prices fell.

The March futures contract for coffee dipped to nearly 95 cents a pound on the New York Coffee, Sugar and Cocoa Exchange.

Bert Ruiz, a vice president of Balfour Maclaine Corp., said the big decline on heavy volume followed an estimate Thursday by the Brazilian coffee agency that it has more than 16 million bags of coffee on hand.

“That’s a lot of coffee, but very little of it is the finer, exportable type,” said Ruiz.

It was apparently enough to scare traders, who also felt that coffee futures had risen too much earlier this week when it went above $1.05 a pound, he said.

Coffee settled 4.25 to 7.32 cents lower, with the contract for delivery in March at 95.18 cents.