1/24/97 -- 4:28 PM

Wall Street Closing,0436

NEW YORK (AP) - Stocks fell sharply today, extending Thursday's late selloff, as interest rates jumped toward their highest level in nearly four months in the bond market.

The Dow Jones industrial average lost about 59 points, sliding over the last hour after erasing all but 10 points of a 93 1/2-point afternoon plunge.

Broader stock measures also faltered with bonds in a late rebound.

Stocks opened with modest losses, but the morning slide steepened as bonds turned lower, boosting interest rates.

Bond prices were hurt by supply pressures from this week's auction of new Treasury securities and some weakening in the dollar, which makes the payoff on U.S. securities less attractive in foreign currencies.

As bonds fell today, the yield on the 30-year Treasury bond - a key determinant of borrowing costs that has surged in recent weeks amid renewed inflation jitters - jumped from late Thursday's 6.86 percent to as high as 6.92 percent, a level it hasn't finished a day at since late September.

Stocks started to recover in the afternoon as Treasury prices trimmed the day's losses. But the rebound soon faltered in the bond market, with stocks trailing lower into the close as the long-bond yield settled at 6.88 percent.

Declining bond prices also triggered a late wave of profit-taking on Thursday, abruptly ending the Dow's first trip above 6,900 and the denying other widely watched measures the latest in a stream of new highs. The Dow swung from a 56-point gain to a 94-point loss over the last two hours of the second busiest session in U.S. stock market history.

``Interest-rate fears just caught up with the market,'' said Brian Belski, technical analyst at Dain Bosworth in Minneapolis. ``We haven't seen this level in interest rates in a while.''

The Dow's biggest decliners were DuPont, Eastman Kodak, General Electric, and Philip Morris. IBM's shares fell for the third straight session in the aftermath of the computer maker's earnings report.

Helping cushion the Dow's fall was Alcoa and General Motors, which rose after The Wall Street Journal reported the automaker may boost its dividend and approve a stock buyback.

The technology-laden Nasdaq was weighed down by Cascade Communications, which plunged as late Thursday's otherwise strong earnings report spurred fears about slowing growth for the digital switching technology concern.

Overseas, Tokyo's Nikkei stock average fell 1.2 percent, Frankfurt's DAX index fell 1.2 percent and London's FT-SE 100 fell 1.2 percent.

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