The dollar extended its rebound against most major currencies Thursday, helping to soothe stock and bond markets.
Analysts said the dollar's gains Wednesday and Thursday, boosted by market intervention engineered by the Clinton Administration, suggested that the battle to strengthen the battered buck is being won so far.
In New York, the dollar leaped to 102.85 Japanese yen from 101.85 on Wednesday. It also rose to 1.667 German marks from 1.654 on Wednesday.
The Federal Reserve Bank of New York and the central banks of 15 other nations intervened heavily in the U.S. and European markets Wednesday, buying up dollars. It was the largest coordinated intervention by the leading industrialized nations since August, 1992.
Though there wasn't any sign of central bank buying on Thursday, analysts said currency traders treaded lightly for fear of triggering more intervention.
"People are nervous about the central banks coming back," said Earl Johnson, foreign exchange adviser at Harris Trust & Savings Bank in Chicago. "Their attack was very effective."
The dollar's ongoing decline this year, which accelerated over the past week, raised concerns about higher U.S. inflation and the flight of foreign capital from U.S. assets.
A falling dollar boosts the price of exports coming into the United States, and also devalues U.S. assets held by foreigners.
The Clinton Administration's decision to defend the dollar helped the bond market stabilize for a second day, traders said. Foreign investors would be more likely to purchase U.S. bonds if they thought the dollar would rise, because a stronger dollar automatically boosts the value of dollar-denominated assets held by foreigners.
The yield on the 30-year Treasury bond held steady at 7.33%, and shorter-term yields also were mostly unchanged.
But some analysts said the bond market's flat day had more to do with hesitation ahead of today's April employment report than the dollar's rebound.
Wall Street analysts estimate that unemployment remained steady at 6.5% in April and that non-farm payrolls rose by just under 200,000.
A stronger-than-expected employment report could send interest rates up again, in anticipation of another credit-tightening move by the Fed.
Meanwhile, stocks closed mixed in quiet trading Thursday, as traders there also awaited today's employment report.
"The smartest thing anybody could say about this market is that it's looking for something to push it one way or another," said Richard Meyer, head equity trader at Ladenburg, Thalmann & Co.
The Dow Jones industrials eased 1.78 points to 3,695.97, as declining issues narrowly outnumbered advancers on the New York Stock Exchange. Volume was only 256 million shares.
The Nasdaq composite index of mostly smaller stocks, however, managed to edge up 0.25 point to 740.55.
Jim Weiss, executive vice president at IDS Advisory Group, said the market's relative calm in the past few sessions could be a sign it was nearing the end of its correction phase.
"The volatility is starting to dampen down," he said. "We're not getting the kind of swings on news we were getting four or five weeks ago."
Among the market highlights:
* Insurance stocks rose amid sentiment that the downward pressure on premiums is easing. Aetna rose 1 to 53 7/8, Marsh & McLennan jumped 2 to 87, Chubb gained 1 1/4 to 78 1/4 and General Re leaped 4 1/8 to 120 7/8.
* Energy stocks also were strong, as crude oil prices jumped in reaction to the outbreak of civil war in Yemen. Light, sweet crude oil for June settled at $17.29 a barrel, up 43 cents on the New York Merc.
Also, the International Energy Agency revises upward its forecast for oil demand in industrialized countries this year.
Among energy shares, Arco gained 2 1/8 to 99 3/8, Phillips Petroleum added 7/8 to 31 7/8, Chevron rose 7/8 to 87 and Royal Dutch advanced 2 1/8 to 107 7/8.
* Many health care issued continued to advance. Abbey Healthcare rose 1 to 21 3/4, Wellpoint Health jumped 1 1/8 to 33 7/8, United HealthCare gained 1 to 48 3/4 and Ramsay-HMO surged 2 to 65 1/4.
* On the downside, electric utility stocks suffered another drop. The Dow utility index fell 2.11 points to 192.79, a new 52-week low, resuming the slide that began last fall.
Pacific Gas & Electric tumbled 7/8 to 24 3/4, San Diego Gas & Electric lost 5/8 to 21, American Electric Power dropped 7/8 to 30 1/2 and Florida's FPL Group slumped 2 1/8 to 31 3/4. Merrill Lynch downgraded FPL stock.
Weak utility stocks often are viewed as a bad omen for interest rates, because they frequently decline in advance of rising rates.
* Auto stocks also lost more ground, perhaps on disappointment over April sales reported Wednesday. Ford fell 1 to 59, Chrysler dropped 1 1/4 to 45 3/4 and GM sank 1 1/8 to 55 5/8.
* Among Southland issues, Encino-based security firm Pinkerton slid 1 5/8 to 16 5/8 after reporting that it barely broke even in the first quarter, despite higher revenues. The company blamed certain start-up costs for new accounts and "strong price competition" in the security-guard market.
Overseas, London's FTSE-100 index rallied, climbing above the psychologically important 3,100 level. It rose 35.5 points to 3,106.00. In Frankfurt, the DAX index eased 13.18 points to 2,235.84.
Both the Mexican and Japanese markets were closed for holidays.
In commodities markets, coffee futures topped $1 a pound for the first time in more than 3 1/2 years on speculative buying ignited by tight supplies.
"It's just a buying frenzy," said analyst Judy Ganes of Merrill Lynch & Co.
Green coffee beans for May delivery surged 5.45 cents on New York's Coffee, Sugar & Cocoa Exchange to $1.002 a pound, the highest daily settlement for near-term deliveries since Sept. 5, 1990.
Coffee futures have rallied 27.7 cents this year, or about 38%, as production and exports have dwindled due to nearly five years of low prices and poor growing weather in some producing countries.
Prices have also been driven higher by an agreement among 28 producer countries to hold back up to 20% of normal exports. The countries began retaining shipments Oct. 1 but stopped last week when a 20-day moving price average reached 80 cents a pound.
Their agreement requires the producers to begin releasing the retained stocks when the indicator price reaches 85 cents. It stood at 82.83 cents Thursday.
Elsewhere, near-term gold futures fell on New York's Comex to $373.60 an ounce, off $3. Silver fell 6.8 cents to $5.11 an ounce.