NEW YORK, FEB. 2 -- Fresh declines in interest rates, including a prime rate reduction by some of the nation's biggest banks, helped the stock market post a modest advance today despite emergence of new signs of economic weakness.

Some analysts said investors' concerns that the economy could be headed into a recession restrained what might otherwise have been a more enthusiastic response to the latest rate reductions.

The Dow Jones average of 30 industrials, which fell 13.59 on Monday, finished up 8.29 at 1952.92.

But the market's best-known index had traded below Monday's close for most of the day, off nearly 17 points at mid-morning, before it pushed into positive territory in the last two hours of the session.

Jack Baker, head of block trading at Shearson Lehman Hutton Inc., said the the news of the rate declines "took a little while to work its way through the stock market."

Advancing issues outpaced decliners by a margin of about 8 to 7 among issues listed on the New York Stock Exchange. The NYSE composite index rose 0.28 to 143.61.

Big Board volume slowed to 164.92 million shares from 210.66 million shares on Monday.

Before the market opened, the Commerce Department reported that its chief economic forecasting gauge fell in December for the third straight month. The index of leading economic indicators edged down 0.2 percent in December after falling 1.2 percent in November and 0.1 percent in October.

The government also reported that sales of new homes fell 6.2 percent in December after a 2.4 percent drop in November.

Some analysts say the three-month decline in the leading indicators may signal a recession or an impending slowdown in economic growth that could dim the outlook for corporate profits.

But others say a slowdown could pave the way for lower interest rates, making returns on stocks more competitive with those on bonds.

In addition, several major banks across the country lowered their prime lending rates by a quarter percentage point to 8 1/2 percent, a level not seen since July 1986.