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Investors run from stocks to Treasuries

Another drop in the stock market sent investors running to U.S. Treasuries on Friday, giving bond prices a lift for a second day despite a dearth of news about economic growth and inflation.

The benchmark 30-year Treasury bond rose 15/32 points, or $4.69 for each $1,000 in face value. Its yield, which moves in the opposite direction from price, fell to 6.27 percent from 6.30 percent late Thursday.The rally added to a $15.50 gain in the previous session, which was prompted by turmoil in global equity markets after the Hong Kong stock market fell 10 percent and set off a chain reaction.

Although the Hong Kong market rebounded Friday, U.S. equity investors were unconvinced that the turmoil in Asia was over and continued to worry about a squeeze on profits for companies that do business there.

The Dow Jones industrial average fell 132 points to close at 7,714. The drop gave the Dow a two-day loss of 320 points, or about 4 percent. Nervous stock investors poured money into the bond market as they sought a safe haven for their money.

"This is a new twist in the Treasury market outlook that, besides the domestic fundamentals, we now have a situation where we have to pay attention to other financial arenas," said Kevin Flanagan, money market economist at Dean Witter Securities.

Hugh A. Johnson, chief market strategist at First Albany Corp., said the crisis in Asia could help slow economic growth and restrain inflation in the United States.

"It's hard to imagine that there won't be any economic fallout from the crisis because there will be," Johnson said. "U.S. exports to the region will suffer and that will contribute to the slowdown in the U.S. economy."

However, market observers expect the Asian problems to slide into the background next week as bond investors focus on domestic economic news and Federal Reserve Chairman Alan Greenspan's testimony to Congress.