Financial Markets : Stocks Drift Lower; Dollar Mixed : Market Overview

The stock market settled lower, capping a dull, seesaw session.

* In the government bond markets, bond yields rose in light trading with little news to affect the market.

* The dollar ended mixed against key foreign currencies in subdued year-end trading, as market tensions eased somewhat over the apparent success of the European Community’s weekend summit.

Stocks

Prices opened lower as trading got back to normal after the surprise storm that ripped through the New York area on Friday and curtailed stock market activity.

Computer-triggered buy programs quickly kicked in, sending equities into positive territory for a while before they seesawed for the rest of the session.

The Dow Jones average lost 11.88 points to end the day at 3,292.20.

In the broader market, declining issues outnumbered gaining ones by about 9 to 8 on New York Stock Exchange volume of 187.04 million shares. On Friday, 164.51 million shares changed hands.

“The market has been a little tired,” said Richard Meyer, head of equity trading at Ladenburg, Thalmann & Co. “People are taking a breather--they want to see what’s coming out of the Clinton camp.”

In Little Rock, Ark., President-elect Bill Clinton opened a two-day economic conference where 320 business people, academicians and others will dissect the nation’s problems and consider solutions.

“People want to watch and see what comments he might have to make about the marketplace,” Meyer said.

Many investors have been selling stocks to cash in on profits before the increase in capital gains tax that is expected under the Clinton Administration.

Still, trading was generally lackluster.

“A lot of the year-end portfolio readjustments already have taken place,” said Michael Metz, an analyst with Oppenheimer & Co.

Among the market highlights:

* Arkla, which fell 1/8 to 8 1/8, was the most actively traded issue on the Big Board with 3.4 million shares changing hands. Arkla Chairman Thomas (Mack) McLarty III resigned to become Clinton’s chief of staff.

* Pacific Telesis, which plans to separate its telephone companies from its wireless telephone business, gained 3/8 to 44 3/4. Quantum fell 1 1/4 to 13; the company could not explain the decline.

* Among other actively traded issues, IBM gained 1/2 to 62 7/8; Philip Morris lost 3/4 to 78 1/4; Chrysler added 3/8 to 32 3/8, and Coca-Cola, which said it will introduce a colorless version of its Tab soda, lost 3/8 to 39 1/2.

On the NASDAQ, Calgene fell 1 1/4 to 15 3/4. The Davis, Calif., developer of genetically engineered plants disclosed plans for an offering of 2 million additional shares of its common. Meanwhile, Biogen added 1 1/4 to 48 1/4, while Amgen dropped 3/4 to 72.

* Alpha Microsystems increased 7/16 to 1 11/16 after the Santa Ana-based company estimated its third-quarter net income would be $190,000 to $250,000, up from just $39,000, or 1 cent a share, last year.

* Integrated Circuit Systems jumped 1 1/2 to 25. The Norristown, Pa., company declared a three-for-two stock split, payable to holders of record Dec. 21.

* Telco Systems fell 3/8 to 7. The Norwood, Mass., company said its net income slid to 7 cents a share in the first quarter ended last month, from 21 cents a year ago. Sales fell to $21.5 million from $26.2 million.

* Microsoft added 3/4 to 87 1/8--partially reversing the 6 1/8 it lost in the final three days of last week. Shares of Wellfleet Communications, the recently hot computer networking company, slumped 2 1/2 to 70.

* Elsewhere, CompUSA, a computer retailer, surged 1 1/2 to 33 1/4, while Price Co., a warehouse-style store operator, slipped 1/2 to 39 1/4.

Overseas, stocks eased in Tokyo, with the 225-share Nikkei average down 151.05 points for the day at 17,289.97. In Frankfurt, the 30-share DAX average closed down 6.26 points at 1,469.75, its lowest close since Oct. 16. London’s Financial Times 100-share average gained 5.6 points to end at 2,721.8.

Credit

The yield on the government’s 30-year bond rose to 7.46%, up from 7.43% late Friday. Its price, which moves opposite to its yield, was down 10/32 point, or $3.13 per $1,000 in face amount.

With the lack of fresh news to trade on, bond prices continued their downward path from Friday, analysts said.

“The market just steadily drifted lower,” said Steven R. Ricchiuto, chief economist at Barclays de Zoete Wedd Securities Inc.

The federal funds rate, the interest on overnight loans between banks, was quoted at 3%, up from 2.813% late Friday.

Currency

Foreign exchange traders said some of the anxiety in the market Friday going into the EC summit in Edinburgh, Scotland, had faded. Leaders of the 12 EC nations said after the meeting that they had successfully revived a flagging movement toward economic and monetary unity.

The mark continued to gain in value Monday, which traders ascribed to the German central bank strategy of keeping interest rates high. That makes mark-denominated investments worth more.

Traders said the mark’s strength was putting pressure on some of the weaker neighbor currencies, notably the French franc, but having no significant impact on the dollar.

“For the rest of the year, there’s really no direction for the dollar,” said Peter Iversen, assistant chief dealer at the foreign exchange desk of Shawmut Bank in Boston.

The dollar closed in New York at 1.570 German marks, down from Friday’s close at 1.579 marks. The greenback fetched 123.765 yen, down from 123.90 yen late Friday. The British pound closed at $1.567, up from $1.557 Friday.

Commodities

Live cattle futures prices surged to a new eight-month high on the Chicago Board of Trade as the third winter storm in less than a month lashed the sodden feedlots of the Southern Plains.

On other commodity markets, orange juice futures sank for the fifth straight day; precious metals were lower; oil futures fell; and grains and soybean were mixed.

Live cattle for December delivery jumped 0.88 cent to 79.30 cents a pound, the highest settlement for near-term deliveries since April 9.

Meanwhile, on New York’s Commodity Exchange, gold fell 60 cents to $334.60 an ounce and December silver slipped 0.3 cent to $3.704 an ounce.

Energy futures settled mostly lower on the New York Merc in featureless trading, with light, sweet crude oil finishing the day unchanged at $19.09 a barrel.

Market Roundup, D8