STOCKS : Interest Rate Fears Pull Dow Down 15.99

Stock prices posted their first loss of the week Thursday in light selling attributed to worries about rising interest rates.

The Dow Jones index of 30 industrials, which had risen 39.41 points over the previous three sessions, dropped back 15.99 to 2,727.70.

Declining issues outnumbered advances by about 3 to 2 in nationwide trading of New York Stock Exchange-listed stocks, with 584 up, 861 down and 518 unchanged.

Volume on the floor of the Big Board came to 132.19 million shares, down from 142.30 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 159.53 million shares.

Interest rates rose Thursday in the market for U.S. Treasury securities. Prices of the longest-term government bonds dropped more than $10 for each $1,000 in face value, putting their yields in the 8.59%-8.63% range.

Analysts said the activity in bonds continued to reflect worries that an apparently budding revival in economic growth might tend to push rates higher in the months ahead.

Brokers also noted a downturn for the dollar against the Japanese yen in foreign exchange. A recent rise in the dollar had been cited as a plus for U.S. interest rates, in part by serving to attract foreign investors into American securities.

Thursday’s losers among the blue chips included Procter & Gamble, down 5/8 at 68 1/4; Coca-Cola, down 3/8 at 75 1/2; General Electric, down 3/8 at 64 1/2; American Telephone & Telegraph, down 1/4 at 42 5/8, and International Paper, down 3/4 at 51 1/8.

Prices fell in a stagnant session on London’s Stock Exchange. The Financial Times-Stock Exchange 100-share index was down 12 points, or 0.5%, at 2,263.0 at the close.

CREDIT Bond Prices Drop as Dollar Declines

Bond prices tumbled Thursday in tandem with a big drop by the dollar against the Japanese yen.

The Treasury’s closely watched 30-year bond fell 1 5/16 points, or $13.13 for every $1,000 in face value. Its yield, which rises when the price falls, soared to 8.58% from 8.46% late Tuesday.

A wave of dollar-selling by speculators and central bank intervention sent the U.S. currency tumbling by more than 1.2%, or nearly 2 yen in Tokyo. Analysts said the dollar had gained 8% against the yen in the last month.

“We started losing ground as dollar declined,” said Kevin Flanagan, a money market economist with Dean Witter Reynolds Inc.

James Capra, senior vice president Shearson Lehman Government Securities Inc., said a falling dollar pushes bond prices lower because it makes U.S. imports more expensive, raising inflationary fears. It also can indicate that Japanese investors are selling bonds and following up by selling dollars. Japanese institutions are large buyers of U.S. government securities.

Analysts said bond prices were depressed first by a declining dollar in overnight trading in Tokyo. The major cause was a report that Japan’s Finance Ministry had advised insurance funds not to buy any more U.S. Treasury securities, which the ministry later denied.

In Washington, the government reported that personal income rose 0.9% in February. The figure was higher than traders expected and interpreted as a negative for the bond market.

Another negative was an announcement by Resolution Funding Corp., the government agency overseeing the thrift bailout, that it would sell 40-year bonds on April 10. That raised concerns about increasing the supply of securities on the market, although the agency did not say how large an auction it was planning.

In the secondary market for Treasury securities, prices of short-term government issues fell 1/8 point to 1/4 point, intermediate maturities declined 1/2 point to 3/4 point, and long-term issues were down 29/32 point to 1 5/16 point, according to Telerate Inc., a financial information service.

The movement of a point equals a change of $10 in the price of a bond with a $1,000 face value.

The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8 7/16%, up from 81/4% late Tuesday.

COMMODITIES Cocoa Prices Soar on Supply Concerns

Cocoa futures prices surged to new seven-month highs Thursday on New York’s Coffee, Sugar & Cocoa Exchange on persistent speculation that economic turmoil in Brazil and the Ivory Coast could cause significant supply disruptions.

On other markets, livestock and meat futures mostly were lower; grains and soybeans advanced; precious metals rose; and energy futures were mixed.

Cocoa futures settled $21 to $27 higher, with the contract for delivery in May at $1,190 per ton, the highest settlement of a near-month cocoa contract since Aug. 16.

The rally followed a rise of $47 in the May contract on Wednesday.

Analyst Harry Schwartz of Cargill Investor Services Inc. said most of the buying was again by speculators and for the same reasons as on Wednesday: fears of supply disruptions from the world’s two largest cocoa producers.

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