FINANCIAL MARKETS : Sagging Dollar Lifts Yields; Dow Gains 9.68

Bond yields rose sharply Friday as the dollar fluttered to unprecedented lows and frightened off foreign investors. The dollar’s weakness also eroded hopes that the Federal Reserve Board might begin lowering interest rates.

The yield of the Treasury’s bellwether 30-year bond rose to 7.53% from 7.48% on Thursday. Its price, which falls as the yield rises, fell five-eighths of a point, or about $6.25 per $1,000 in face amount.

Foreign investors steered clear of dollar-denominated securities, which are hurt when the U.S. currency is weak, and headed for healthier German and Japanese investments.

Blue-chip stocks, meanwhile, inched higher, defying the dollar’s plunge and the steep runup in interest rates. But the broader market was mixed.

A late burst of buying pushed up the Dow Jones industrial average 9.68 points to 3,989.61 at the close. The blue-chip index spent most of the session in negative territory.

Buoyancy in technology issues through the session helped head off steep losses, and late bottom-fishing among economically sensitive issues bolstered the Dow.

Declining issues outnumbered advancing ones by about 6 to 5 on the New York Stock Exchange. Big Board trading was brisk, with 330.84 million shares changing hands, compared to 330.03 million shares traded Thursday.

Among Friday’s highlights:

Technology stocks shot upward after Hewlett-Packard cut its personal computer prices and introduced two products based on Intel’s fastest Pentium chip.

* Hewlett-Packard rose 7/8 to 116 5/8. IBM rose 2 5/8 to 79 7/8; Compaq climbed 1 to 34 5/8; Advanced Micro Devices rose 1 3/4 to 31 1/2. Intel rose 2 57/64.

* Auto stocks finished mixed after languishing for most of the day. Chrysler fell 3/4 to 40 3/4, but General Motors finished unchanged at 39 7/8 and Ford rose 1/4 to 25 5/8.

* U.S. Shoe Corp. soared 5 3/8 to 24 1/8 after Italian eyeglass maker Luxottica Group said it was opening a tender offer for U.S. Shoe at $24 a share. Luxottica fell 7 7/8 to 31 3/4 in U.S. trading.

* W. R. Grace fell 1 1/4 to 43 1/2 a day after its president and chief executive, J. P. Bolduc, resigned.

* National Gypsum ended 9/16 higher at 50 13/16 on news that it had rejected a takeover offer of $48.50 a share from BPB Industries.

Overseas markets were mixed. Tokyo’s Nikkei average ended 76.44 points higher at 17,039.62. In Frankfurt, the DAX average closed 9.17 points off, at 2,109.49. In London, the Financial Times 100-share average fell 13.1 points to 3,025.1.

Mexico’s Bolsa index gained 2.44 points to close at 1,519.52.