Dow Ekes Out a Gain Ahead of Jobless News : Market Overview

* Stock prices bounced around erratically as traders turned cautious ahead of today’s August unemployment report. Most major stock indexes closed flat to slightly higher for the day.

* The dollar rebounded against other major currencies as traders reshuffled positions ahead of the unemployment data.

Stocks

A stronger dollar, impressive overseas stock gains and follow-through buying after Wednesday’s 24-point Dow rise gave Wall Street a strong start.

But as trading wore on, buyers became wary ahead of today’s employment report for August, analysts said.

The Dow Jones industrial average, up more than 20 points at its mid-session peak, finished with a 1.89-point gain to 3,292.20.

Advancing issues outnumbered declines by about 5 to 4 on the New York Stock Exchange, where volume rose to 212.47 million shares from Wednesday’s 187.01 million.

Wall Street was helped early on by Tokyo’s strong performance overnight. The Nikkei index shot up 798.77 points, or 4.5%, to close at 18,386.49, renewing its rally of recent weeks.

At midday today the Nikkei added another 432.36 points to 18,818.85.

The Japanese market was driven Thursday by fresh hopes of lower interest rates, demand from investment trusts and talk that the government could issue bonds to help pay for a new $87-billion economic package, brokers said.

Meanwhile, shares also rocketed in London after news that Britain’s Treasury will borrow the equivalent of $14.48 billion in foreign currencies to support the pound. The Financial Times 100-share average soared 68.9 points, or 3%, to 2,381.9.

In Frankfurt, the DAX average gained 24.08 points to 1,530.75.

Analysts expect the August U.S. employment data to show a strong increase in non-farm payroll employment, which has been a focal point of worries for months now about the progress of economic recovery.

However, the gain is expected to stem to a large extent from special one-time factors, mitigating its positive impact.

Stock investors are eager to see signs that the economy is growing, even if at a slow rate.

Among Thursday’s highlights:

* Most stock groups closed mixed, with both big winners and big losers in many industries.

Retailers, for example, mostly followed the trend in their respective August sales reports. Wal-Mart gained 1/2 to 57 5/8. But others were hammered on disappointing reports, including Gap, off 2 to 33 3/8; Ann Taylor, down 1 1/2 to 20 1/2, and MacFrugal’s, off 3/8 to 10 1/4.

* Oil service issues were mostly higher on new reports suggesting that Hurricane Andrew caused extensive damage to facilities in the Gulf of Mexico. Halliburton rose 1 to 34 7/8, and Baker Hughes gained 3/4 to 24 1/2.

But oil stocks pulled back from their recent gains. Exxon tumbled 2 to 62 1/4, Arco fell 1 1/2 to 113 1/2, and Chevron lost 1/2 to 72 5/8.

* Some classic growth stocks continued to show new life. Johnson & Johnson advanced 2 1/8 to 52 5/8, Kellogg jumped 1 3/8 to 68 1/2, McDonald’s rose 7/8 to 43 1/2, and Pepsico was up 1 to 38.

* Among Southland issues, engineering firm Fluor rose 3/4 to 40 7/8 after reporting higher quarterly earnings. Water vendor Glacier Water gained 3/8 to 13 1/2 despite reporting that its chief executive decided to leave the company. The firm said the parting was amicable.

Currency

An announcement by Britain’s Treasury that it was borrowing billions to strengthen the pound also pulled the dollar higher, said John McCarthy, currency trader at ABN-Amro Bank in New York.

In New York, the dollar closed at 1.415 German marks, up from 1.394 Wednesday. The dollar also rose to 123.80 Japanese yen, up from 123.10 Wednesday.

“The (British) announcement started traders selling off the German mark,” McCarthy said. The mark’s weakness automatically translated into gains for the dollar, which has been hammered recently as the mark soared.

Traders also appeared to be squaring currency positions ahead of today’s U.S. unemployment report for August. A strong figure could spark a rally in the dollar, if only briefly, traders said.

Credit

Interest rates closed mostly flat for a second day in a row.

The price of the Treasury’s main 30-year bond was up 5/32 point, or $1.56 per $1,000. Its yield was 7.36% versus 7.37% Wednesday.

Strength in the dollar helped support the bond market, traders said. Bond trading also came alive after auto makers reported weak sales figures for the last 10 days of August, analysts said.

The federal funds rate, the interest on overnight loans between banks, fell to 3.313%, down from 3.375% late Wednesday.

Commodities

Gold for October delivery rose $2.30 on New York’s Comex to $341.70 an ounce. September silver rose 3.1 cents $3.72.

Meanwhile, natural gas futures rose sharply on the New York Merc after the U.S. Minerals Management Service said hurricane damage to platforms and pipelines in the Gulf of Mexico off the Louisiana coast last week was much greater than thought.

October natural gas rose 8.0 cents to $2.13 per 1,000 cubic feet.

But light, sweet crude oil for October slipped 2 cents $21.67 a barrel.