NEW YORK, SEPT. 20 -- The Dow Jones industrial average fell 39 points today in a broad decline as the sagging economy and rising tensions in the Mideast remained keynotes of the market, traders said.

Declines swamped advances on the New York Stock Exchange by a 9-to-2 ratio on lightly moderate volume.

Crude oil for October delivery settled up a hefty $1.53 per barrel at $34.71, the record high on the New York Mercantile Exchange, and stock traders widely cited concern over Iraq.

"The market is still digesting Alan Greenspan's congressional testimony" of Wednesday, said chief trader Kenneth Ducey at S.G. Warburg & Co. He was referring to the Federal Reserve chairman's remarks that the economy could be pushed into recession by high oil prices and that high inflation mitigated against an easing of monetary policy to avoid such a recession. "And the Middle East is still a powder keg."

"There's been no concrete news today to cause a nearly 40-point loss in the Dow," said chief trader Thomas Gallagher at Oppenheimer & Co. "But I think Iraq's most recent revelation that it intends to blow up all the oil fields in the event of war -- Saddam {Hussein} has said this before -- is having a little more effect on the market Thursday than it has in the past."

Moreover, he said there is continuing talk in the market about low U.S. banking liquidity, reinforced by jitters over the ramifications of the potential bankruptcy of important municipalities -- the city of Philadelphia is the most prominent example.

However, analysts generally saw the session as a follow-through from Wednesday, when the negative tone of comments from Greenspan, combined with rising tensions in the Mideast, sent the Dow to a 13-point loss.

The Dow slipped 17 points to 2540 at the outset, extended its loss to 45 points at 2512 by midmorning, and after a long, lethargic midday rally, slumped to a session low at 2507, down 50 points, with less than 25 minutes remaining.

The late, 50-point loss triggered the NYSE's curb on program selling, which provides that computerized program sales can be executed only after upticks in the individual basket stocks comprising program trades.

At the close, the Dow stood at 2518.32, down 39.11, on volume of 145 million shares.

Oil's latest surge was partly attributed to refining problems, a chilly fall weather forecast and a prediction of $60-a-barrel oil if war breaks out in the Mideast.

The dramatic rise was also explained by the internal dynamics of the futures market, where speculators buy and sell oil contracts that are based on their estimates of what will happen to supply and demand later.

Some traders had previously gambled that prices would go down. They agreed to sell October contracts that they did not have, thinking they would be able to get the oil cheaper at a later date. But prices hit record highs this week, and today was the last trading day for October futures, so the speculators who were caught short were forced to buy the contracts at steep prices.

Cash prices of oil got into the $40 dollar range around the early 1980s, when the Iranian revolution threw oil markets into a state of chaos, but the Mercantile Exchange was not selling crude futures at that time.

Oil prices have risen almost 75 percent since Iraq invaded Kuwait on Aug. 2.

There were some positive surprises in the stock market, as when Apple Bancorp opened up 3 3/8 at 34 1/4 after a delay in reaction to dissemination of news that its board of directors has voted to remove the last hurdles preventing major shareholder Stanley Stahl from bidding $38 per share for the company. Apple will terminate two trusts that were set up to handle defensive legal expenses. The stock closed up 5 1/2 at 36 3/8.

But the direction of the broad market was hardly in doubt, traders said. Broad and significant losses were posted among key stocks in such diverse industry groups as computers, chemicals, steel, drugs, foods, retailers, grocery, cosmetics, shoes, insurance, financial services and banks.

Food stocks were broadly sold as well. CPC International gave up 1 3/4 to 75 1/8, Ralston Purina lost 2 7/8 to 97 1/8 and full-point deficits were suffered by Campbell, Castle and Cooke, General Mills, Quaker Oats and Dekalb.

Drug stocks did poorly as Dow component Merck slipped 1 1/8 to 75 3/4, Lilly fell 1 3/4 to 70 1/8, Pfizer lost 1 to 70 3/4, Schering-Plough slipped 1 to 42 7/8, Warner-Lambert dropped 1 3/4 to 59 1/2 and Syntex lost 1 1/4 to 53 3/8.

Among broad stock indexes, the Standard & Poor's 500 was down 5.12 at 311.48, the NYSE Composite fell 2.69 at 171.22, the Value Line was off 3.74 at 237.03, the Amex Market Value dropped 1.79 at 317.18 and the Nasdaq Composite was down a hefty 7.25 at 364.43.