FINANCIAL MARKETS : Dollar Tickles 100 Yen; Blue Chips Edge Down
The dollar rose to a 6 1/2-month high against the yen on Wednesday as the Japanese currency suffered from the failure of two major Japanese financial institutions.
Wall Street stocks ended mostly higher, meanwhile, bolstered by selective buying in the technology group, but the overall tone of the market remained lackluster.
In Japan, regulators said they will close Kizu Credit Union and Hyogo Bank.
In late New York trading, the dollar fetched 99.01 yen, up from 98.05 late Tuesday.
In early Thursday trading in Tokyo, the dollar rose as high as 99.42 yen, its highest since last Feb. 8, when it traded at 99.50 yen.
The Dow Jones industrial average fell 3.87 points to 4604.57, but most other indexes firmed. In the broader market, advancers led losers 1,229 to 951 on moderate volume of 330 million shares on the New York Stock Exchange.
The technology-laden Nasdaq composite index ended up 8.97 points at 1,012.61.
Among Wednesday’s market highlights:
* Blue-chip stocks were depressed by International Business Machines Corp., which lost 1 to 101 1/2. Stronger technology stocks included Intel, up 1 1/2 to 60 3/8, Microsoft, up 1 3/8 to 93 1/4, Micron Technology, up 1 1/2 to 73 3/8, and Texas Instruments, up 7/8 to 73 7/8.
* Regional bank and thrift stocks climbed after a federal appeals court ruled that the U.S. government breached its contract with Glendale Federal Bank regarding supervisory goodwill and is liable to the bank for damages.
After reaching 1995 highs earlier, Glendale rose 1 7/8 to 16 5/8, California Federal rose 1 5/8 to 15 7/8, Coast Savings added 3 1/4 to 27, Long Island Bancorp was up 3 1/8 to 26 3/8 and Dime added 3/4 to 12 1/8.
Kevin Timmons, senior bank analyst at First Albany Corp., said CalFed, Coast, Long Island Bancorp and Dime via its takeover of Anchor were seen as potential key beneficiaries of the ruling. Now the banks can go after the government “to make good on the profits they would have made,” he said.
* Among individual shares, RJR Nabisco added 5/8 to 28 3/8 after rising Tuesday on news that Brooke Group received clearance to buy up to 15% of RJR’s stock.
* Airline shares were weaker on news of fare cuts, market analysts said. AMR Corp. lost 1 1/2 to 69 7/8, UAL Corp. was off 2 1/4 to 151 1/8 and Delta Air Lines fell 1 5/8 to 74 5/8.
* Heart Technology Inc. rose one to 26 1/2 after it agreed to merge in a stock deal with Boston Scientific Corp., whose shares were up 5/8 to 39 5/8.
The market shrugged off an upward revision in second-quarter gross domestic product to a 1.1% pace of growth.
“It is my view that the GDP report said that we haven’t made as much progress in the second quarter of eliminating the inventory overhang as we had thought,” said Hugh Johnson, chief investment officer at First Albany Corp.
The yield on the Treasury’s main 30-year bond fell to 6.69% from 6.71% late Tuesday.
The Standard & Poor’s composite index of 500 stocks edged up 0.92 of a point to 560.92. The American Stock Exchange index rose 5.82 to 524.01.
The NYSE Composite index of all listed common stocks rose 0.44 to 301.40. The average price per share rose 5 cents.
In commodities trading, silver futures prices plummeted 5% on the New York Mercantile Exchange as visible stockpiles of the metal climbed sharply.
The rise in silver stocks at exchange-approved warehouses after a steep decline earlier this month raised new suspicions of market manipulation.
“It was clear to everybody that this material was not being fabricated into real products for people to use,” said metals analyst George Milling-Stanley of Lehman Brothers Inc.
On other commodity markets, cotton futures surged and coffee futures fell sharply. The Commodity Research Bureau’s index of 21 commodities dropped 1.23 points to 238.10.
Silver for September delivery plummeted 28.3 cents, or 5%, to $5.236 a troy ounce on the Commodity Exchange division of the New York Mercantile Exchange. In contrast, October gold fell $1, a relatively slight decline, to $383.10 a troy ounce.
Silver opened lower after the Commodity Exchange, known as Comex, reported that silver in exchange-approved warehouses rose by 10.9 million ounces Tuesday to 162.3 million.
After the close of trading Wednesday, Comex reported another big jump in visible stocks, up 7.3 million ounces to 169.6 million.
Some observers believe the silver now moving into Comex warehouses is the same metal that was removed in mid-August, when stocks plunged by 34 million ounces over a 10-day period.
Prices zoomed 12%, from $5.215 to $5.86 an ounce, between Aug. 11 and Aug. 21. Prices began dropping Aug. 22, and Comex stocks started rising a day later.
“It was an interesting speculative play, with somebody taking stocks out of Comex and keeping it somewhere else where it was not clearly visible, and then putting it back,” Milling-Stanley said.
In overseas trading, Tokyo’s 225-share Nikkei average ended the day down 151.30 points at 17,983.86.
In Mexico, the Bolsa index of 37 shares closed down 9.20 points at 2,480.09, but gainers outpaced decliners on the broader market by a 39-32 margin.
