STOCKS : Treasury Sale Spurs Market; Dow Up 13.41

Stocks inched up Wednesday on a warmer-than-expected response to the second leg of the Treasury’s quarterly bond sale, which pushed interest rates down.

The Dow Jones industrial average closed up 13.41 points to 2,930.90 after falling 24.15 points Tuesday.

In nationwide trading of New York Stock Exchange-listed stocks, 867 rose while 682 declined and 529 were unchanged. Volume on the floor of the Big Board continued moderate at 157.24 million shares, against Tuesday’s 153.29 million.

The market had been more skittish than usual about the government’s quarterly refunding auction after a lukewarm response to a sale of three-year notes Tuesday.

“After yesterday, the expectation was that the whole thing would be very bad,” said Ron Hill, analyst at Brown Bros. Harriman.

But investors showed strong interest in the $11.75 billion in 10-year notes sold Wednesday as the second leg of the record $37-billion refunding was completed.

The market’s obsession with the Treasury sale illustrated that investors are grasping for reasons to buy stocks now, some traders noted. With the economy still uncertain, the market continues to churn, and most investors seem reluctant to make major commitments--as shown by Wall Street’s slowing trading volume.

Among the market highlights:

In the absence of other major news, energy stocks attracted new buying. Traders said the group was benefiting from investors’ efforts to find stocks that have lagged so far this year. Among oil and oil-service companies, Unocal gained 3/4 to 27 5/8, Halliburton rose 1 to 43 and Exxon added 5/8 to 58 1/4.

Also, Occidental Petroleum gained 1 1/4 to 20 1/4, buoyed by the sale of key North Sea assets to a British and French group.

Du Pont led the Dow index higher, gaining 1 1/8 to 42 3/4. Smith Barney raised its rating to “buy” from “hold,” based on expectations for an “imminent” bottom in the chemicals business.

Many financial stocks continued to recover, based on hopes for lower interest rates. Merrill Lynch jumped 1 1/8 to 39 3/4, First Interstate gained 1 1/8 to 39 5/8 and mortgage company Countrywide Credit was up 7/8 to 21.

Also, many California insurance stocks that had been battered recently on earnings concerns continued to rebound. Twentieth Century rose 1 1/4 to 42 1/4, and Fremont General added 7/8 to 20. Fremont reported first-quarter operating earnings up 17%.

Some technology stocks lured new buyers. IBM rebounded 1 7/8 to 103 3/4, Intel rose 1 1/4 to 51 1/2, Teradata gained 5/8 to 18 1/2 and Autodesk jumped 2 1/2 to 55 1/4.

Eljer Industries jumped 8 7/8 to 21 7/8 after the bathroom-fixtures company said it had received an unsolicited proposal from Jacuzzi, a Hanson PLC unit, to acquire the company for $20 a share. Investors were betting Hanson would have to raise its bid.

Nike lost 2 1/4 to 46 1/4. Traders cited a Montgomery Securities earnings and rating downgrade.

San Diego Gas & Electric dropped 4 7/8 to 38 5/8 as the California Public Utilities Commission voted unanimously to reject the proposed merger with SCEcorp.

Perris-based Modtech fell 1/2 to 6 1/4. After the close, the builder of modular school classrooms reported a first-quarter loss.

In overseas trading, Germany’s DAX average of 30 leading shares closed 20.18 points lower at 1,607.28. Britain’s Financial Times 100-share average ended down 17.1 points at 2,523.4.

Tokyo’s 225-share Nikkei average fell 32.35 points to end at 26,309.79.

In Mexico City, however, the Bolsa index jumped 3.3%, or 30,960 points, to a record 961,874 as the market anticipated “fast track” authority by the U.S. Congress for free trade talks.

Credit

Bond prices firmed after the strong auction for 10-year notes, but analysts offered a cautious outlook for the last leg of the government’s refunding auction.

The Treasury’s bellwether 30-year bond rose 3/16 point, or $1.88 per $1,000 in face amount, at closing Wednesday. Its yield fell to 8.22% from 8.24% late Tuesday.

The 10-year notes were sold at an average yield of 8.07%, up from 7.85% at the last such auction on Feb. 6. But traders said the reception was better than many had expected.

At the same time, analysts remained wary about the prospects of today’s auction of $11.75 billion in 30-year bonds. The longer-term bonds are always toughest to sell.

The federal funds rate, the interest on overnight loans between banks, dipped to 5.675% from 5.688% late Tuesday.

Currency

The dollar rose in quiet trading, as the market marked time ahead of the April producer price report, due Friday.

The dollar ended at 138.30 Japanese yen, up from Tuesday’s finish of 137.85 yen, and at 1.731 German marks, up from 1.717 on Tuesday.

“With the (Ascension Day) holiday for most of Europe tomorrow, European traders went home early, and New York didn’t take the initiative,” said David Factor, a dealer for Fuji Bank in New York.

Commodities

A failure to resolve the Soviet Union’s urgent request for $1.5 billion in grain credits sent corn and soybean futures prices lower on the Chicago Board of Trade.

The weakening corn prices set off a flurry of sell orders when new-crop deliveries fell below $2.50 a bushel, said William Biedermann, research director for Allendale Inc. in Crystal Lake, Ill. Farmers sold corn on cash markets for the same reason, he said.

Corn futures tumbled 4.25 to 5.75 cents, with May at $2.42 a bushel; soybeans were 1.75 to 5.50 cents lower, with May at $5.72 a bushel.

Elsewhere, supply concerns sent gasoline and crude oil futures higher on the New York Mercantile Exchange. Light, sweet crude oil settled 34 cents higher, with the June contract at $21.78 a barrel.

Gold ended the day 40 to 60 cents higher, with June at $358.50 an ounce on New York’s Comex. Silver rose 1.1 cents to $4.05 an ounce.

Market Roundup, D8