FINANCIAL MARKETS : Dow Stays on Downtrend as Fear Takes Hold

Blue-chip stocks extended their losing streak into a fourth session Thursday as the market focused again on the presidential election and the prospects of a U.S. default in March if Congress takes no action to raise the nation’s debt limit.

The Dow Jones industrial average lost 20.59 points to end at 5,485.62, bringing its four-day loss to 146 points.

In the broader market, declining issues led advancers 1,462 to 887 on an active volume of 448 million shares on the Big Board. The Nasdaq composite index was off 7.50 points at 1,100.05.

“The political uncertainty has cast a shadow over the market,” said Bill Meehan, analyst at Prudential Securities. “As the presidential campaign rolls around, no one is talking about reining in the deficit.”

Treasury Secretary Robert Rubin told the House Ways and Means Committee on Thursday that the government could default on its obligations by March 21 should Congress fail to raise the $4.9-trillion debt ceiling. He urged lawmakers to act promptly to raise the ceiling and not to attach conditions to the bill that would be unacceptable to the Clinton administration.

“His comments didn’t help” stocks, Meehan said.

The threat of a default has contributed to the recent surge in long-term bond interest rates.

On Thursday, the price of the Treasury’s main 30-year bond finished up 1/32 point, or 31 cents per $1,000 in face value. Its yield, which moves in the opposite direction, fell to 6.46% from 6.47% late Wednesday.

Early in the day it climbed to 6.53%--the highest level in five months. In mid-February, the yield was just 6.03%.

Stocks and bonds fell at the opening on news that weekly jobless claims fell to 359,000 from a downwardly revised 382,000 the previous week, a sign that the economy could be stronger than previously thought.

Later, the markets recouped their losses on news that the February Chicago Purchasing Managers index--a measure of business activity--was at 44.9, far below the expected 51.5.

Among market highlights:

* LSI Logic tumbled 8 3/4 to 27 5/8 after warning that its first-quarter earnings will be weaker than expected. Other semiconductor equipment makers fell in sympathy.

* Revlon jumped in its first day of trading, rising 3 5/8 to 27 5/8.

* Some economically sensitive issues such as paper and retail stocks moved lower. Boise Cascade fell 1 3/4 to 35 1/4. Woolworth fell 1/2 to 12.

* Oil stocks rose. Oil prices have been lifted by continued uncertainty about Iraq’s ability to resume selling oil in world markets. Exxon gained 1 1/4 to 79 1/2. British Petroleum rose 2 1/8 to 100 3/8 and Mobil added 1 3/4 to 109 5/8 after the two companies agreed to combine refining and fuel-marketing operations in Europe.

In foreign markets, London’s FTSE-100 ended 10.6 points lower at 3,727.6, but Tokyo’s 225-share Nikkei average advanced 205.40 points, or 1.03%, to 20,125.37. Hong Kong’s Hang Seng Index plunged 138.97 points, or 1.23%, to end at 11,125.68.

In Mexico City, stocks fell to their lowest level in two months amid concern that higher interest rates and a tumbling peso will hurt company earnings. The Bolsa index dropped 30.05 points, or 1.05%, to 2832.54 in its fourth-straight decline.

The dollar firmed despite momentary disappointment that the German central bank left official short-term interest rates unchanged. Concern that the Bank of Japan is likely to continue to purchase dollars for yen also helped support the greenback.