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Takeover Bids Inspire Market; Dow Up 16.18

June 07, 1989|From Associated Press

NEW YORK — Stock prices pushed ahead today in an atmosphere of excitement stirred up by two takeover bids in the communications industry.

The Dow Jones average of 30 industrials climbed 16.18 points to 2,512.50.

Advancing issues outnumbered declines by about 9 to 5 on the New York Stock Exchange, with 976 up, 536 down and 493 unchanged.

Big Board volume totaled 213.71 million shares, against 187.57 million in the previous session.

The NYSE's composite index gained 1.42 to 182.35.

The market got an overnight stimulus from the news that Paramount Communications was making a $175-a-share cash tender offer for Time Inc., which has been planning to merge with Warner Communications.

And traders scrambled for cellular telephone stocks after word that McCaw Cellular Communications made a $120-a-share offer for LIN Broadcasting.

Those developments prompted speculative buying of other communications stocks.

Analysts said the overall market also continued to benefit from evidence that the Federal Reserve might have begun to relax its credit policy by permitting a modest decline in the interest rate on federal funds, overnight loans between banks.

Bonds rose in early trading today, strengthened by world demand for dollar-denominated securities and growing confidence that U.S. interest rates have stabilized or may ease further.

The Treasury's benchmark 30-year bond advanced about $2.50 per $1,000 in face amount. Its yield, which moves in the opposite direction from price, eased to 8.38% from 8.4% late Tuesday.

Bond market strategists attributed some market strength to foreign hunger for dollars and securities priced in the U.S. currency, partly reflecting a shift of assets into the United States because of political unrest in China and elsewhere. The United States historically has been considered a safe haven for investors.

"There is just an insatiable appetite for dollar-denominated paper," said John V. Sebastian, chief economist at Clayton Brown & Associates in Chicago.

Some analysts also attributed the rise in bond prices to confidence that the Federal Reserve is moving to ease credit conditions. Interest rates already have fallen substantially in a few months.

Others said they are optimistic that government figures on May wholesale prices, to be released Friday, will show only moderate inflation, which also would help bond prices.

In the secondary market for Treasury bonds, prices of short-term governments rose 1/16 point, intermediate maturities rose about 1/4 point and long-term issues rose about 1/8 point, the Telerate Inc. financial information service said.

The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

In corporate trading, industrials rose slightly. Moody's investment grade corporate bond index, which measures total return on a portfolio of 80 corporate bonds with maturities of five years or longer, rose 0.53 to 321.36.

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