NEW YORK, JAN. 14 -- Financial markets, increasingly skittish about the prospects for war in the Persian Gulf, played what traders described as a "waiting game" today as the deadline for the Iraqi pullout from Kuwait drew near.
"It's eerie out there. Very eerie," said Suzanne Pearse, an oil broker with Dow International Energy Corp. here. "The game isn't being played the way it normally is. I think it's fairly safe to say that you have a waiting game."
Oil prices rose $3.49 to $30.78 a barrel in one of the biggest increases ever, which analysts attributed to growing fears that hostilities in the gulf will threaten Mideast oil supplies, at least temporarily.
Stock prices fell, while gold prices and the dollar went up in nervous trading that saw the day's trends briefly reversed after Cable News Network reported that Iraqi withdrawal from Kuwait was a matter of "not when, but how." But the flurry of activity stirred by the report was short-lived, as cynicism about the report set in among many traders.
The Dow Jones industrial average finished the day with a 17.57-point loss at 2483.91 after being down by as much as 40 points for much of the trading session. Volume on the New York Stock Exchange was a light 120 million shares, reflecting the uncertainty among buyers and sellers who stayed on the sidelines.
The CNN report, which came shortly after 3 p.m., caused a rally that narrowed the decline to about 10 points, but the losses increased as traders grew more skeptical about the news, which was attributed to an unnamed Iraqi source.
"I don't think people want to commit millions of dollars to something that could turn out to be just a repackaging" of old peace rumors, said Marc Cohen, a currency trader who is vice president of Fuji Bank. Over the past few months, he noted, "every bit of news has been reversed or watered down."
Analysts said the stock market's unwillingness to accept the potential good news reflected the high amount of pessimism among many traders. "I think there's still a lot of fear that this is going to be resolved with an outbreak of hostilities," said market analyst Michael Metz of Oppenheimer & Co. here.
Fears of war also drove the oil futures market at the New York Mercantile Exchange. The price of high-quality benchmark crude had been up nearly $5 a barrel shortly after the Nymex opened, driven by traders' weekend assessments of increased chances for war. "We're trading up again on fears that war is just around the corner," said Tom Bentz, trading director of United Energy Inc.
The Nymex closed before the CNN report, but oil on the informal "spot" market between companies fell to about $30 a barrel after the news.
Oil market brokers and analysts said traders appeared to be moving to lock in supplies before a war drives prices higher, although "technical" trading and attempts by some traders to cover "short" positions also were cited for the price increase.
"I think more and more people see the likelihood of peace diminishing very quickly," said Thomas Blakeslee, an analyst at Pegasus Econometric Group Inc. in Hoboken, N.J. With the deadline looming, he added, "I think it's a 24-hour period here where you'll see more buying come into the market as we get closer."
Gold and the dollar also were up sharply, although response to the CNN story blunted some of the gains. On the New York Commodity Exchange, gold rose $8.50 an ounce to $400.10. Also in New York, the dollar closed the day against the Japanese up 1.15 yen at 135.19.
Treasury bonds, which rose briefly after the CNN report, finished the day on the down side. The Treasury's bellwether 30-year bond fell 1/16 point, or 63 cents per $1,000 in face amount, at closing. Its yield, which moves in the opposite direction of price, was 8.37 percent, up from 8.36 percent late Friday.
Occidental Petroleum stock was the day's most active issue on the New York Stock Exchange, rising 1/4 to 17 5/8 after the company announced a broad financial restructuring that would reduce its debt by 40 percent. Other oil company stocks were also higher, reflecting rising oil prices and expectations of healthy fourth-quarter profit reports. Texaco rose 62 1/2 to 58 1/4, Amoco went up 62 1/2 to 49 1/4 and Arco rose 1 1/8 to 119 7/8.
Among Dow components, Eastman Kodak dipped 1 to 38 5/8 and IBM trimmed an over 2-point loss in the last hour to close down 1 3/8 at 106 3/4. Chevron rose 1 to 71 3/8 and Westinghouse added 1 1/8 to 24 1/8.
Industry groups that suffered conspicuously during the worst periods of trading included the foods, drugs and high-technology issues.
Among broad stock indexes, the Standard & Poor's 500 was down 2.74 at 312.49, the NYSE Composite fell 1.57 at 171.21, the Value Line was down 3.02 at 231.13, the Amex Market Value declined 2.04 at 296.72 and the Nasdaq Composite fell 6.05 at 355.75.