Wild oil prices keep
investors on edge

NEW YORK » Stocks managed to squeeze out modest gains in a volatile session yesterday as crude oil futures, which briefly topped $58 per barrel in early trading, settled lower. A rare piece of good news for embattled Dow Jones industrial American International Group Inc. helped blue chips make gains.

Oil prices again kept investors on edge after reaching a new intraday high of $58.28 early in the morning. After fluctuating throughout the session, oil futures settled at $57.01, down 26 cents, on the New York Mercantile Exchange.

Yet oil remained a source of concern for investors, who fear that crude prices in the high $50 range could eat into consumer spending, prompting either an economic slowdown or rising prices that could trigger inflation. And there was no real sign that oil would decline substantially.

"It's hard to say where that line in the sand is, that level for oil prices where the market will seriously sell off," said Scott Wren, equity strategist for A.G. Edwards & Sons. "I do think that if you have sustained levels of $60 to $65, then the market will be very hard pressed to make any move to the upside."

The Dow Jones industrial average rose 16.84, or 0.16 percent, to 10,421.14.

Broader stock indicators also moved modestly higher. The Standard & Poor's 500 index was up 3.20, or 0.27 percent, at 1,176.12, and the Nasdaq composite index gained 6.26, or 0.32 percent, to 1,991.07.

Bonds edged lower as oil prices fluctuated, with the yield on the 10-year Treasury rose to 4.46 percent from 4.45 percent late Friday. The dollar was mixed against other major currencies, while gold prices fell.

AIG gained $2.35 to $53.30 after New York Attorney General Eliot Spitzer said a civil resolution with AIG would be achievable, and that the company was fully cooperating with his investigation of the company's accounting and business practices.

The concerns about higher oil prices drew attention away from ChevronTexaco Corp.'s $16.4 billion acquisition of oil explorer Unocal Corp., the reported sale of Morgan Stanley's Discover Card division and the possibility of a renewed bidding war for MCI Inc.

Unocal tumbled 7.4 percent, or $4.75, to $59.60, due to the relatively low valuation; ChevronTexaco lost 3.9 percent, or $2.33, to $56.98.

Morgan Stanley climbed $1.43 to $58.30, after a media report said the company's board had approved the sale of its Discover Card credit division.