Dow Up 113 as Copper Prices, Dollar Decline

Stocks surged Monday as investors worried less about Asia’s financial troubles and indulged in a traditional year-end buying spree, although copper crumbled to a four-year low on Asia-related worries.

The dollar dropped against the yen after a senior Japanese official said Japan could intervene in a surprising way to defend its currency. Oil prices fell to their lowest level in almost two years.

The Dow Jones industrial average rose 113.10 points to 7,792.41, pushing this year’s gain back above 20% with just two sessions to go.

Broader measures also posted big gains as many traders returned from a five-day Christmas break looking for stocks that might benefit from January’s predictable surge of demand from holiday bonuses, annual contributions to retirement accounts and money freed up by year-end tax-related selling.

“For the moment, people feel better about overseas markets and it’s that time of year when selling pressure comes off,” said Marshall Acuff, market strategist at Salomon Smith Barney Holdings.

Advancing issues outnumbered decliners by more than a 2-1 margin on the New York Stock Exchange in moderate trading.

Bank and technology stocks led the rally. The technology-laden Nasdaq composite index jumped 26.07 points to 1,537.45, a gain of 1.7%.

The Standard & Poor’s 500-stock list rose 16.89 points to 953.35, bringing the year’s gain to 28.7%.

The NYSE composite index rose 7.89 points to 501.49, and the Russell 2,000 index of smaller companies rose 5.17 points to 426.66.

“Though it’s not over by any means, the Asian situation seems to have stabilized over the last few days,” said Ricky Harrington, technical analyst for Interstate/Johnson Lane.

Even with the sudden burst of optimism, however, there were few indications that investors had grown carefree about Asia’s unresolved financial mess.

Although the big advancers included several bellwethers in technology and banking, the two groups deemed most vulnerable to Asia’s troubles, Monday’s gains were fairly broad-based.

Analysts pointed to a rebound in South Korean stocks over the weekend. Domestic investors also took heart as top officials from major banks met in New York and Tokyo to discuss rolling over loans to South Korea, which faces $30 billion in loan repayments over the next two months.

The improved sentiment fostered the traditional “Santa Claus” rally, which is fueled in part by investors expecting new cash to surge into stocks in January.

Monday’s rally lifted stocks across the board, including those of oil firms, computer makers, banks and Internet-related companies, some of the sectors that have been sold off sharply because of their exposure to Asia. Wireless communications companies surged as investors reconsidered their exposure to South Korea.

In the bond market, the 30-year Treasury bond fell, raising its yield to 5.92% from 5.90% on Friday. Bond prices and yields move in opposite directions.

Among Monday’s highlights:

* Dow gainers cut a wide swath across all major sectors. AlliedSignal rose $2.44 to $38.25, Chevron gained $2.19 to $77.50, Procter & Gamble added $2.19 to $79.81 and J.P. Morgan advanced $2.19 to $113.63.

* Technology issues that rebounded included Microsoft, up $5.56 to $126.31, and Dell Computer, up $4.50 to $82.88. But Intel advanced just 5 cents to $70.92.

* Bank stocks rose amid optimism that foreign banks will reschedule loans to South Korea, giving the country more time to rebuild its economy. Bank of New York rose $1.63 to $56.63, BankAmerica rose $1.50 to $72.31, Bankers Trust New York rose $2.88 to $114.50, Citicorp rose $4.06 to $126, Chase Manhattan rose $2 to $108.69, Sumitomo Bank of California rose $1.38 to $52.38 and Wells Fargo rose $4.19 to $328.25.

In commodity markets, copper prices fell to their lowest level in four years as speculators sold heavily on the outlook for growing supplies and on worries about weaker industrial demand due to the Asian crisis.

At the Commodity Exchange in New York, copper prices followed the lead of trading in London earlier in the day, setting new life-of-contract lows for the second time in three sessions. Copper for March delivery closed 1.20 cents lower at 77.70 cents a pound.

At the New York Mercantile Exchange, crude oil prices dropped to 23-month lows on talk that Iraqi oil sales are likely to resume soon under an “oil-for-food” program backed by the United Nations, traders said.

Crude oil for February delivery closed 58 cents lower at $17.62 a barrel.

The dollar, meanwhile, fell to 129.30 Japanese in late New York trading from 130.41 yen late in Friday’s holiday-shortened session after Eisuke Sakakibara, Japan’s vice finance minister for international affairs, said his country is determined to stop excessive yen weakness and that, if need be, could intervene.

In Tokyo, Japanese stocks rose, led by bank issues, after reports that global financial institutions agreed to help alleviate South Korea’s short-term credit crunch, a move that will boost Japanese banks with heavy exposure in the country, traders said.

The Nikkei-225 rose 1.97% after hitting a 2 1/2-year low earlier in the session.