FINANCIAL MARKETS : Markets Jump on News of Mexican Aid

U.S. financial markets rebounded in brisk trading Tuesday, boosted by President Clinton’s decision to embark on a new effort to help financially strapped Mexico.

However, lingering wariness about the eventual outcome of Mexico’s crisis and anxiety over interest rates tempered buyers’ enthusiasm on Wall Street. The Dow Jones industrial average rose 11.78 points to 3,843.86.

In the broad market, winners outnumbered losers by about 7 to 5 on the New York Stock Exchange, where the composite index climbed 1.03 points to 255.93.

The Standard & Poor’s 500 stock index gained 1.91 points to 470.42. The Nasdaq Stock Market composite rose 3.37 points to 755.20. At the American Stock Exchange, the market value index gained 1.82 points to 435.36.

Clinton’s revamped aid package that sidesteps Congress also cheered the bond market, pushing the Treasury’s key 30-year bond yield down to 7.69% from 7.76% on Monday. Its price, which rises when yields fall, closed up 3/4 point, or $7.50 per $1,000 in face value.

Yields on short- and intermediate-term Treasuries also finished lower or were barely changed from Monday.

Trading was extremely brisk on the NYSE, where 409.56 million shares changed hands--up from 318.56 million shares on Monday--and was the ninth-heaviest trading session ever.

In a speech to the National Governors Assn., Clinton outlined a nearly $50-billion package to Mexico that needs no congressional approval and can be implemented through executive order. U.S. funds would account for $20 billion of the total.

Following the announcement, Mexican stocks soared, with the Bolsa index shooting up 195.08 points, or 10.3%, to close at 2,093.98 in heavy trading.

Other Latin markets also rebounded with Mexico. Brazil’s Bovespa stock index surged 8.5% and Argentina’s Merval index soared 7.1%.

Uneasiness about interest rates, however, restrained U.S. stock investors from buying more aggressively, traders said.

The central bank’s Federal Open Market Committee began a two-day meeting Tuesday at which the panel was expected to raise short-term rates by 0.5 percentage point. An announcement is expected today.

Harry Laubscher, analyst at Tucker Anthony, said investors continued to move into classic growth stocks Tuesday, anticipating that higher interest rates will slow the economy and crimp earnings of cyclical industrial companies.

Among Tuesday’s highlights:

* Mexican and other Latin American stocks took the session’s spotlight.

Telmex toped the NYSE’s most-actives list, surging 4 1/2 to 35 1/4. Media company Grupo Televisa rose 4 3/4 to 23 3/4, while construction company Grupo Tribasa added 2 3/8 to 11 1/2.

Also, Argentine oil company YPF gained 1 to 20 5/8. Compania de Telefonos de Chile added 4 3/8 to 73 3/8, Brazil Fund jumped 3 to 30 1/2 and Argentina Fund jumped 1 1/2 to 12 1/8.

* Drug stocks rose as investors sought out growth issues. Johnson & Johnson gained 1/2 to 58 1/8, Merck rose 1 1/8 to 40 1/4 and Pfizer jumped 1 3/4 to 81 3/4.

Other growth stocks gave ground, however, after rising sharply Friday and Monday. Gillette eased 7/8 to 76 7/8, Disney was off 1/4 to 50 7/8 and Procter & Gamble lost 5/8 to 65 1/8.

* IBM’s board authorized a $2.5-billion share repurchase while maintaining its quarterly dividend at 25 cents a share. The stock rose 3/8 to 72 1/8.

* GM rose 1 1/2 to 38 7/8 after its fourth-quarter profit beat estimates. Chrysler was up 1/4 to 44 7/8 and Ford rose 1/2 to 25 1/4.

* Xerox’s fourth-quarter earnings came in at the high end of analysts’ forecasts, and the stock jumped 4 7/8 to 109 3/8.

Among other foreign markets, Tokyo’s 225-share Nikkei average fell 103.06 points to 18,649.82, while Frankfurt’s 30-share DAX average closed down 13.76 points at 2.021.27. In London, the FTSE-100 ended off 4.3 points at 2,991.6.