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STOCKS CLOSE HIGHER AS DOW BOUNCES BACK

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Stocks closed sharply higher in moderate trading Friday after late computer-driven buy programs boosted gains fueled by a surge in the long bond despite a stronger-than-expected employment report.

The Dow Jones industrial average, which plunged 38.36 points Thursday, bounced back 44.75 points to 3745.62 - its biggest one-day gain since soaring 55.51 points on Oct. 28.The New York Stock Exchange composite index rose 1.97 to 248.01, while Standard & Poor's 500-stock index climbed 4.38 to 453.30. The average price of a share gained 24 cents.

Advances outpaced declines 1,295-953 among the 2,893 issues crossing the NYSE tape.

Adjusted volume eased to 284,744,000 shares from 285,918,000 in the same period Thursday.

Prices ended slightly higher on the American Stock Exchange and modestly higher on the Nasdaq Stock Market.

Treasury securities ended higher with the long end surging more than a full point. The U.S. dollar finished stronger, breaching the 100-yen level for the first time in seven weeks.

The bellwether 30-year Treasury bond, which eased 5/32 Thursday to yield 8.02 percent, jumped 1 8/32 to 95 12/32. The issue's yield, which moves in the opposite direction of its price, was 7.91 percent.

The dollar changed hands at 1.5802 German marks and 100.61 Japanese yen, up from 1.5733 marks and 99.34 yen late Thursday.

In overseas trading, the Tokyo stock market closed slightly lower as players awaited the release of U.S. employment numbers.

London lost further ground as concerns over possible interest-rate hikes in the United States and Britain were compounded by stronger-than-expected U.S. employment data.

Frankfurt also retreated further as investors remained on the sidelines in anticipation of U.S. economic numbers, but Paris bucked the downward trend as stability in U.S. stocks and bonds despite the strong U.S. jobs data encouraged local players.

On Wall Street, Alan Ackerman, executive vice president at Reich & Co., said the bond rally, which pushed the long bond yield below the 8 percent level, "was music to the market's ears."

He said the bond market drew support from the dollar's strength and the decline in commodity prices, which were led by the drop in crude oil prices to a seven-week low.

Ackerman said the stock market was tentative in the early going because of "a lot of nervousness and negativism. The market felt a Fed tightening was in the making following the strong employment numbers. But as the bond rally took hold, equity players began to participate and the buying fed on itself."

The analyst said the stock market also took solace from late Thursday's Senate passage of the General Agreement on Tariffs and Trade.

Don R. Hays, director of investment strategy at Wheat First Butcher & Singer in Richmond, Va., said that although stocks and bonds started out weak, bonds quickly turned around because players in the two markets reacted differently to the stronger-than-expected employment news.

Hays said bonds rallied on the "perception that the Fed will raise rates again, which will slow the economy down," and that "is bad for stocks because an economic slowdown will hurt earnings."

Bond investors fear an overheating economy will lead to runaway inflation, which erodes the value of fixed-income instruments like notes and bonds.

Bond traders have said there is a growing feeling the Federal Reserve's next tightening move could come at its last policy meeting this year on Dec. 20.

Other analysts said bond players also found some relief that the jobs report showed a decline in the work week and wages.

Shortly before the market opened, the Labor Department reported that the nation's unemployment rate slid 0.2 percentage point to 5.6 percent during November, the lowest level in over four years, while non-farm payrolls increased by 350,000 jobs.

Economists had expected the employment would remain unchanged at 5.8 percent and a gain of 250,000 in non-farm payrolls.

Labor said the increase in non-farm jobs in October was revised downward to 164,000 from the previously reported 194,000.

The department also said the work week for the private sector shortened and employee wages decreased in November.

Meanwhile, the Commerce Department reported that the government's main gauge of future economic output dipped 0.1 percent in October - its first decline in 15 months.

The decline in the index of leading economic indicators was the first drop since July 1993.

Economists had anticipated the index to have remained unchanged.

On the NYSE trading floor, Wal-Mart Stores paced the Big Board actives, easing 1/8 to 22 3/8.