OVERSEAS : Nikkei Drops 349.07 After Two Days of Huge Gains

Following a two-day spurt in stock prices, the Tokyo Stock Exchange reverberated downward today, with the Nikkei average sliding below the 30,000-yen level in the first minutes of trading before rallying later in the morning.

After shedding almost 675 points at one stage of the morning, the 225-share Nikkei index ended the morning down 349.07 points, or 1.15%, at 30,048.86. In the previous two days of trading, the index had registered its fourth- and fifth-largest one-day gains ever.

The dollar, meanwhile, opened at 158.15 yen, rebounding from a 1.02-point loss Monday that caused it to finish at 156.45 yen.

During the early morning today, several reports came in that the central banks of the United States, Switzerland, Italy, Britain and West Germany were intervening in their markets in support of the yen. But the overseas intervention was mild and was conducted in dollars, not in the currencies of the European countries. As such, brokers here described it as a formality.

A statement by Finance Minister Ryutaro Hashimoto just before trading began today, in which he welcomed the overseas intervention, appeared to have had little initial influence on the markets.

On Monday, however, stockbrokers had cautioned that Friday’s and Monday’s gains--1,029.72 and 1,119.15 points, respectively--were bound to spur reaction from investors. On April 2, the market had hit bottom for the year with a closing of 28,002.07.

The beleaguered Tokyo market for more than six weeks has been buffeted by a barrage of bad news. But it was cheered Monday by the successful conclusion Friday of U.S.-Japanese talks to remove structural impediments to trade and by a declaration Saturday in Paris by the finance chiefs of seven leading industrialized nations that a decline in the yen’s value could bring “undesirable consequences.”

After the markets closed Monday, Yasushi Mieno, governor of the Bank of Japan, said he thought the Tokyo markets were “settling down” and predicted that stocks were unlikely to decline further.

Mieno also said Saturday’s statement of concern about the falling yen had a positive effect on the exchange and stock market Monday. Without it, the markets would have been more volatile, he said.

“The market has now developed a consensus that stocks bottomed out last week,” Yukio Itagaki, a Kokusai Investment Trust Management Co. director, said after trading closed Monday. But he predicted then that fluctuations would continue, adding, “This is still a rebound phase--not an advance.”

Traders on Monday said they were encouraged by two straight days of relatively heavy trading.