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Stocks closed lower but well above opening lows in tandem with bonds in volatile trading Friday as the U.S. dollar stabilized after plunging to a new postwar low against the Japanese yen.

The Dow Jones industrial average, which rose 11.76 points to a new all-time high 4172.56 Thursday, slipped 14.87 points to 4157.69.The Dow's loss quickly widened to 50 points about 15 minutes after the opening bell, triggering the New York Stock Exchange's "up-tick rule" that restricts computer-driven sell programs to help stabilize the market.

But the frantic selling continued for a few more minutes, plunging the Dow to a 60-point loss before the program curb took hold.

The NYSE composite index eased 0.80 to 271.03, while Standard & Poor's 500-stock index fell 1.51 to 500.71. The average price of a share lost 10 cents.

Declines topped advances 1,260-897 among the 2,906 issues crossing the NYSE tape.

Adjusted volume slid to 352,947,000 shares from 362,023,000 in the same period Thursday.

Prices ended narrowly mixed on the American Stock Exchange and marginally higher on the Nasdaq Stock Market.

Treasury securities ended moderately lower, while the U.S. dollar finished sharply lower.

The bellwether 30-year Treasury bond, which fell 13/32 Thursday to yield 7.41 percent, slipped 8/32 to 102 8/32. The issue's yield, which moves in the opposite direction of its price, was 7.43 percent.

The dollar changed hands at 1.3735 German marks and 86.55 Japanese yen, down from 1.4090 marks and 89.58 yen late Thursday.

Currency traders said disappointment over the dollar's inability to sustain a rally after Germany's interest-rate cut Thursday sparked a sell-off that sent the beleaguered currency diving to a new post-World War II low of 86.23 yen in early trading.

In overseas trading, the Tokyo stock market retreated on a sell-off triggered by a disappointing five-year deregulation plan unveiled by the government.

London fell sharply on concerns about the dollar's renewed weakness and rising fears of higher U.S. interest rates, while Paris also retreated in a consolidation of Thursday's strong gains and on the franc's renewed weakness.

On Wall Street, Hugh Johnson, head of the investment policy committee at First Albany Corp. in Albany, N.Y., said the dollar's plunge in the early going triggered a sell-off in stocks and bonds because "it's very troubling to see that the dollar had ignored the interest-rate cut in Germany" Thursday.

He said the dollar's sharp decline "seems to imply that we may see higher inflation and the Federal Reserve has to respond by raising interest rates. That's bad news for bonds and stocks but good news for precious metals."

But the dollar's ability to stabilize and an economic report indicating that "not only is the economy slowing but the upward pressure on prices may actually be abating" helped both bonds and stocks stage "a very dramatic turnaround," he said.

The Purchasing Management Association of Chicago reported at mid-morning that its area business activity index fell to 55 percent in March from February's 62.7 percent, while the prices paid index declined to 79.3 percent from 88.3 percent.

Johnson said he thinks the sharp selling and volatility were an "overreaction to the dollar's decline."

Richard Thorsell, managing partner at Thorsell Parker Partners in Westport, Conn., agreed that "it's a shocker to watch a reversal of the dollar's strong performance (Thursday). It just spooked the bond market. "

Thorsell also pointed out that Friday marks the end of the first quarter "and there's a lot of crosscurrents. It's a complex day."

Wall Street opened sharply lower as bonds skidded following a stronger-than-expected reading on the economy and the dollar's plunge to a new postwar low against the yen.

Shortly before the market opened, the Commerce Department reported that the economy expanded at an annual rate of 5.1 percent in the fourth quarter of 1994.

Commerce's second and final revision to the nation's gross domestic product in the October-December period was much faster than the previous estimate of a 4.6 percent growth rate.

Most economists had expected the fourth-quarter GDP to have remained unchanged.

On the NYSE trading floor, Compaq Computer paced the Big Board actives, falling 1/2 to 343/8.

Motorola followed, losing 3/4 to 541/2 after a rating downgrade by CS First Boston.

Merck was third, rising 1/2 to 421/2.

First USA was fourth, edging up 1/8 to 417/8. The financial services company's 8.5-million-share secondary offering had been priced at $41.75 a share.