Highlights of Tuesday's market activity, compiled from Times staff and wire reports:
* Stocks rose after new government reports suggesting that the economy has turned the corner and begun to expand. The Dow Jones industrial average rose 19.68 points to 3,256.04.
* Treasury bond yields tumbled after a volatile reaction to mixed signals on the economy. The 30-year T-bond yield closed at 8%, down from 8.07% Monday.
Among a raft of economic statistics issued Tuesday, the Commerce Department said housing starts soared 9.6% last month to an annual rate of 1.304 million units, the highest in nearly two years.
The government also reported that factory output rose 0.6% in February, while inflation remained under control, with consumer prices up just 0.3%.
"The picture that the numbers this morning painted simply showed the economy did turn the corner in February, and it's still carrying with it low inflation," said Hugh Johnson, chief investment officer at First Albany Co.
That positive news helped bring buyers back into the stock market, on hopes for improving corporate earnings. Advancing issues outnumbered losers by 8 to 5 on the New York Stock Exchange. Trading volume rose to 188.80 million shares from 155.95 million Monday.
Stock investors were also encouraged by the drop in bond yields and by a small rebound on the Tokyo market on Tuesday after its Monday plunge.
Most major stock indexes rose with the Dow. The NASDAQ index of smaller stocks gained 5.33 points to 623.27.
Still, Johnson noted that the market rally lacked steam, which probably reflects bond yields' rise so far this year. "The reason the stock market is struggling is that it's very difficult for it to do well when interest rates are so high and attractive as an alternative," he said.
Among the market highlights:
* Industrial stocks powering ahead on the good economic reports included Allied-Signal, up 1 3/8 to 49 3/4; Bethlehem Steel, up 1/2 to 14 5/8; Kimberly-Clark, up 1 to 52 1/4; power-equipment firm Trinova, up 1 1/8 to 24 1/2, and Dow Chemical, up 1 7/8 to 59 3/4.
* Retail stocks were broadly higher. Kmart rose 1 1/4 to 52 after it said sales are strong so far in March. Other winners included Sears, up 1 7/8 to 46 3/8; Price Co., up 1 1/4 to 49 1/4, and 50-Off Stores, up 1 3/4 to 27. Also, Pic 'N' Save added 3/4 to 18 3/4 after an analyst at Legg Mason Wood Walker recommended it.
* Some technology stocks returned to favor. Adobe Systems soared 3 1/2 to 56 on optimism over the software company's new products. Also gaining were Microsoft, up 3 3/4 to 128; Hewlett-Packard, up 1 5/8 to 78 7/8, and data-storage systems firm FileNet, up 1 3/4 to 36 1/4.
Also, Dell Computer jumped 3 1/4 to 39 1/4. Xerox Corp. said it will market Dell's personal computers in 19 countries in South America, Central America and the Caribbean. Xerox rose 1 to 76 1/8.
* Telefonos de Mexico, the Mexican phone monopoly, edged up 1 to 55 1/8 on the NYSE after the company said its board will recommend a dividend increase at its April 10 meeting.
* Azusa-based Optical Radiation jumped 1 3/8 to 29. The company late Monday said it will split into two separate firms.
In foreign markets, London's Financial Times 100-share average rebounded 20.5 points to 2,419.2 on news that Midland Bank is in merger talks with HSBC Holdings, parent of Hongkong & Shanghai Bank.
Frankfurt's DAX average ended up 5.27 points at 1,730.07.
Bond yields rose on the housing- starts report, but fell back later in the session on the industrial production report, which some traders felt was weaker than expected.
The bond market has hit rough waters in recent weeks as yields have risen on worries about the economic recovery fueling new inflation.
Tuesday's mild February inflation report helped calm some nerves, but some traders said the biggest catalyst for the day's bond rally was simply that the market has been so oversold and that traders at least know there are no other major economic reports due this week.
"We got all the bad news--the final piece of economic news for this week," said one trader.
The federal funds rate, the interest on overnight loans between banks, was 3.875%, up from 3.625% Monday.
The dollar fell against most currencies despite new statistics indicating that the U.S. economy continues to recover.
Though a healthier economy should mean a stronger dollar, analysts say some traders want to see better numbers before they move the dollar higher.
The dollar fell in New York to 132.80 Japanese yen from 133.90 Monday. Some analysts expect Japan to lower its interest rates soon. If that rejuvenates the Japanese economy, it could boost the yen.
The dollar also slid to 1.646 German marks from 1.662.
Platinum prices plunged to a six-year low, following gold and silver lower. Platinum for April delivery dropped $7.90 on the New York Merc to $352.60 an ounce.
Silver also dropped. March silver on the Comex in New York lost 1.5 cents to $4.05 an ounce.
Metals prices suffered as whites went to the polls in huge numbers in South Africa to vote on President F. W. de Klerk's reforms. De Klerk favors full political rights for the black majority.
Metals prices had held up in recent months partly on expectations that South Africa would plunge into civil war. If the reforms are approved--as expected--uninterrupted South African production of platinum and gold is likely to continue, keeping supplies up and prices down.
Elsewhere, on the New York Merc, light, sweet crude oil for April delivery climbed 9 cents to $19.24 a barrel.
Market Roundup, D6