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Bond Rise After Italy Plane Crash

April 18, 2002

NEW YORK (AP) _ Bond prices rose Thursday after a plane crashed into a skyscraper in Italy, stirring fears of terrorism even though authorities quickly announced that the crash was probably an accident.

A stock market decline and continuing trouble in the Middle East also prompted investors to buy bonds, perceived as a safe harbor in times of uncertainty.

The price of the benchmark 10-year Treasury note rose 7/32 point, or $2.19 per $1,000 in face value. Its yield, which moves in the opposite direction, fell to 5.20 percent compared with 5.23 percent late Wednesday.

The 30-year bond rose 13/32 to yield 5.70 percent, down from 5.73 percent a day earlier, according to Moneyline Telerate.

The Dow Jones industrial average closed down 15 points at 10,205 and the Nasdaq composite index fell 8 points to 1,802.

Short-term issues like the benchmark 2-year note rose 3/32 point. Its yield fell to 3.31 from Wednesday’s 3.36 percent.

Intermediate maturities rose between 3/32 point and 5/32 point.

Yields on one-month Treasury bills were unchanged at 1.68 percent, with the discount also unchanged at 1.66 percent. Yields on three-month Treasury bills were unchanged at 1.70 percent as the discount remained at 1.68 percent. Six-month yields were 1.88 percent, as the discount fell 0.01 percentage point to 1.85 percent.

Yields are the interest bonds pay by maturity, while the discount is the interest at which they are sold.

The federal funds rate, the interest on overnight loans between banks, rose to 1.75 percent, compared with 1.69 percent the day before.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds fell 1/32 to 103 7/32. The average yield to maturity was unchanged at 5.35 percent.

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