Dow Zooms 57 on Iraqi Peace Feeler

Blue chip stocks closed sharply higher today as investors saw prospects of a short Persian Gulf war in a surprise announcement from Iraq that it will consider a conditional withdrawal from Kuwait.

The Dow Jones industrial average closed up 57.42 points, or about 2%, at 2,934.65. New York Stock Exchange volume was active at 222.37 million shares. Gainers outpaced losers by about 5 to 2.

The upswing was also propelled by computer buying on the expiration of some stock index futures--baskets of stocks linked to future prices.

Iraq’s offer to pull out of Kuwait seemed to set off conflicting emotions in markets around the world.

Following a brief wave of excitement in the moments after it became known, enthusiasm died down. President Bush called the proposal a “cruel hoax” and said it was full of unacceptable conditions.

Still, once they had a while to study the situation, stock traders seemed to conclude that more tangible progress toward an end to the conflict might not be far off.

Also helping the stock market was a sharp drop in oil prices.

Bond prices were mixed in volatile trading. The price of the Treasury’s bellwether 30-year bond was up 1/32 point, or about 31 cents per $1,000 in face value, by midday. The bond’s yield was 7.99%, unchanged from late Thursday.