* The dollar tumbled to another historic low against the Japanese yen, slipping under the 110-yen level in New York. Early today in Tokyo, the dollar fell to a new low oF 10867 yen.
* Stocks closed mostly higher despite the turmoil in the dollar and bond markets, though some computer issues sank. Gold rose.
The dollar's latest plunge began in New York, after a Treasury Department report on exchange rates rekindled speculation that the Clinton Administration favors a stronger yen.
The report said that if the yen continued its recent appreciation it would provide some counterweight to Japan's burgeoning trade surplus with the United States.
With sentiment toward the dollar already depressed Tuesday by news of another drop in U.S. consumer confidence, the Treasury report sparked wide selling.
By the close in New York the dollar was at 109.35 yen, down from 110.60 late Monday. And early today in Tokyo the dollar was at 108.67, the lowest ever.
The renewed decline was significant, dealers said, because until now the dollar has managed to stick above the 110-yen level.
The yen had reached successive record highs earlier this spring, after U.S. officials hinted that allowing the dollar to decline against the yen was good policy--if the Japanese wouldn't otherwise lower their trade surplus.
A strong yen makes Japanese exports more expensive here, while automatically lowering the prices of American goods in Japan.
With the Treasury report, it now appears that the White House is sanctioning another free-fall in the dollar, at least against the yen.
The dollar was weaker against other currencies as well, though the yen was clearly in the spotlight. The dollar settled at 1.630 German marks in New York, down from 1.635 on Monday.
Interest rates moved up slightly, after Fed Chairman Greenspan's unusually upbeat economic assessment fanned inflation fears.
In a speech in Dallas, Greenspan said the nation is in "the early stage of a major expansion in employment," thanks to rising productivity that is boosting corporate profits.
Greenspan probably didn't mean to rile the bond market, traders said, but any talk of a stronger economy fuels concern about an inevitable rise in interest rates.
On Monday, news reports said the Fed has decided to lean in favor of higher short-term interest rates, to keep the economy--and inflation--from rising too quickly.
On Tuesday, rates were lower for most of the day, until traders focused on Greenspan's speech.
At the close, the discount rate on six-month Treasury bills was 3.22%, up from 3.19% at Monday's T-bill auction.
The yield on 30-year Treasury bonds inched up to 7.01% from 7.00% on Monday.
Stock prices turned in another surprising showing.
"The market acted surprisingly well when you consider consumer confidence was lousy," said Gerald Simmons, trader at Interstate/Johnson Lane. The Dow Jones industrials rose 8.85 points to 3,516.63, on top of a 14.95-point gain in Monday's session. Advancing issues outnumbered declines by about 7 to 5 on the New York Stock Exchange, where volume was moderate at 222.81 million shares.
Despite current economic gloom, many investors continue to bet on a better environment later in the year. Greenspan's upbeat assessment of the economy's outlook may have helped buoy stocks, analysts said.
Among the market highlights:
* Industrial stocks led the market. Farm machinery giant Deere leaped 2 3/4 to 63 7/8 after posting surprisingly strong quarterly earnings of $1.44 a share, before one-time charges.
The report suggested that many industrial companies are poised to show powerful earnings growth even with minor sales gains.
Among other industrials, USX-U.S. Steel jumped 1 3/8 to 44 7/8, Clark Equipment rose 1 1/8 to 32, Alcoa surged 1 3/8 to 69 1/4, Reynolds Metals gained 2 1/8 to 47 7/8, and Kennametal added 3/4 to 37.
* Also in the industrial group, mining giant AMAX leaped 4 1/8 to 22 3/4 after it agreed to merge with Cyprus Minerals, to form Cyprus-Amax. Cyprus lost 1 to 26 5/8. The new firm will be a major Force in minerals such as copper, coal and gold. Prior to the merger, AMAX will spin off its aluminum company, Alumax Inc.
* Telecommunications and cable TV stocks continued to advance. AT&T; jumped 1 1/2 to 62, MCI rose 1 3/8 to 52 5/8, Cablevision Systems gained 1 5/8 to 35, and Multimedia surged 1 3/8 to 37 1/2.
* Technology issues were mixed after Dell Computer reported weaker than expected quarterly earnings, citing poor results from its notebook computers. Dell plunged 7 3/8 to 24 3/4.
Other tech losers included Apple, down 1 1/4 to 56 3/8; Compaq, off 1 1/8 to 56 1/4; Digital Equipment, down 1 3/8 to 44 5/8, and Sun Microsystems, which fell 3/4 to 29 1/4.
* Among health care stocks, T2 Medical gained 1 1/2 to 16 7/8. The health care center operator said members of its management have had preliminary talks on taking the company private.
Overseas, Frankfurt's DAX average rose 15.09 points to 1,618.18. London's FTSE-100 average added 12.1 points to 2,837.7.
In Tokyo, the Nikkei average rose 155.60 points to 20,631.76.
Gold resumed its rally, posting hefty gains in U.S. trading after a mixed showing overseas. On New York's Comex, gold for current delivery jumped $4.60 an ounce to $378.50.
Silver also advanced, rising 9.4 cents to $4.63 an ounce.
Elsewhere, light, sweet crude oil for July rose 18 cents on the New York Merc to $19.90 a barrel.
Market Roundup, D6