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Spokane, Washington  Est. May 19, 1883

Asian Concerns Drive Dow Down

Associated Press

Wall Street ended a week of declines Friday, as positive inflation news failed to inoculate stocks against the Asian flu.

The Dow Jones industrial average sagged 10.69 points to 7,838.30 in indecisive trading following a 55-point upward swing and a 64-point drop. The index of blue-chip stocks remains more than 310 points below last Friday’s close, with technology shares taking the most dramatic tumbles.

Many investors fled stocks that have taken a battering over the week in favor of bonds, driving the yield on the 30-year bond to its lowest level since October 1993.

Some bank stocks gained on the prospect of even lower interest rates ahead, something that would reduce the cost of raising money. Bank of Boston rose 1-3/8 to 93-9/16.

Reports continued to emerge of companies facing trouble selling in Asia, leading to an unabated selloff of technology issues.

“There’s a real uncertainty over who’s going to get hit next in the Asian fiasco,” said Jennifer L. Moran, an economist at Donaldson, Lufkin & Jenrette Securities.

Color printing systems maker Electronics For Imaging warned analysts of weak Asian sales, driving its stock down 62 percent, or 24-1/8, to 14-7/8. The selloff spread to rival imaging concerns, including industry goliath Xerox, down 1/2 at 71-3/4.

Shares of technology pace-setter IBM fell 1-11/16 to 99-15/16 as investors feared high-tech firms could face further hits in Asia.

Many analysts expect a number of companies that operate in sluggish Asian economies to issue forecasts that warn that fourth-quarter sales won’t meet earlier expectations.

Nontechnology stocks got a short-lived lift after the Labor Department’s report that prices paid to producers fell 0.2 percent in November, the eighth monthly decline this year.

Traders took the news as confirmation that the Federal Reserve would see no need to cool off the economy by raising interest rates at a meeting next week.

While good news for buyers, the prospect of deflation, or falling prices, raises economic worries. The inability of producers to increase prices - especially when they’re being forced to pay higher wages because of the lowest unemployment rate in 24 years - points to a profit squeeze ahead.

At the same time, U.S. companies are faced with increased competition from Asian manufacturers, whose products have been made cheaper by sharp currency devaluations.

Many analysts believe Wall Street has responded to the Asian crisis with moderation, with stocks dipping modestly amid signs that some companies’ sales will suffer.

“We’re still looking for the S&P and the Dow to move to new highs, with the broader market following in the first quarter of next year,” said Eugene G. Mintz, financial markets analyst at Brown Brothers Harriman & Co.

Advancing issues outnumbered decliners by a narrow margin on the New York Stock Exchange.

Overseas, Tokyo’s Nikkei stock average fell 0.9 percent, Frankfurt’s DAX index rose 1.3 percent and London’s FT-SE 100 edged up 0.2 percent.