30-Year Bond Yield Falls to Historic Low; Dollar Sinks : Markets: The yield on the Treasury’s benchmark bond hits 6.7%. Dow industrials finish with modest gain.

Driven by signs that the slow recovery is not likely to reignite inflation in the near term, the yield on the Treasury’s benchmark 30-year bond sunk to a record low of 6.7% on Friday.

The continued fall in long-term bond yields reflected a string of reports this week showing lethargic economic growth and sparked growing sentiment that the Federal Reserve Board may not raise long-term interest rates after all.

Clinton Administration and Fed officials are counting on low and falling long-term rates to give the economy a boost by encouraging debt-laden consumers and businesses to refinance their loans and by spurring business spending for new plants and equipment.

The declines, if not reversed, should soon show up in rates on 30-year fixed-rate home mortgages, which are already at their lowest levels in two decades.

In other markets, the dollar sank against the Japanese yen while the stock market finished with modest gains after the Dow Jones industrial average temporarily flirted with the 3,500 level.

The close of 6.7% for the long bond, down from 6.73% on Thursday, was the lowest since the Treasury began regular auctions of 30-year bonds in 1977, breaking the previous low of 6.71% set April 15.

Long-term rates had been falling earlier in the year until a series of economic reports sparked the concern that inflation was headed higher. Reports that Fed officials were prepared to raise short-term interest rates to signal their desire to respond to the inflation threat may have helped calm investor fears, some financial analysts said.

Stocks

Blue-chip stocks ended with a small gain after a late rally ran out of steam. The Dow Jones industrial average was up 0.28 point to close at 3,490.89, and was off 3.88 points for the week.

“It’s disappointing,” said Bill Raftery, technical analyst at Smith Barney, Harris Upham & Co. He said it was “typical of a corrective process” that may be growing.

The NASDAQ outperformed the blue-chip market, rising 6.09 points to 694.81 on book squaring near the end of the second quarter.

Shares of 3Com climbed 4 3/4 to 27 after Merrill Lynch upgraded its rating on the computer networking company. Late Thursday, 3Com reported fiscal 1993 earnings in line with Wall Street forecasts.

Apple Computer sank 1 3/4 to 40. Merrill Lynch downgraded its ratings on the firm and cut its 1993 earnings estimate.

Hershey Foods lost 2 3/8 at 47 1/8 after saying second-quarter earnings are likely to fall below last year’s level.

In overseas trading, Tokyo stocks ended lower, with the 225-share Nikkei average dropping 25.50 points to 19,659.57. The Nikkei was off 144.97 points for the week.

In Frankfurt, the DAX 30 index gained 8.95 points to 1,695.24 and was up 8.34 on the week. In London, the Financial Times 100-share average fell 7.2 points to 2,887.5, but was up 8.1 points for the week.

Other Markets

The dollar sank against the Japanese yen amid renewed concerns that the United States wants a higher yen to correct Japan’s huge trade surplus. The U.S. currency also fell on the German mark as dealers took profits after a weeklong rally.

The dollar finished at 106.03 yen in New York, down from 108.70 yen Thursday. The dollar closed at 1.7035 marks in New York, down from 1.7075 at Thursday’s close.

Gold rose on New York’s Comex. Bullion for current delivery gained $2.10 to $377.20 an ounce. Silver jumped 9.8 cents to $4.49.

Light, sweet crude oil for delivery in August settled at $18.84 per barrel, down 5 cents, on the New York Mercantile Exchange.