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U.S. DOLLAR SURGES IN HEAVY TRADING

The dollar surged in heavy European trading this morning and gold prices fell as much as $6.50 an ounce.

The dollar climbed above the key psychological barrier of 2.00 Deutsche marks for the first time since Dec. 19, 1986, and gained 4 cents against the British pound.

In Tokyo the dollar rose despite intervention by the Bank of Japan and closed 1.68 yen higher at 140.45, the first time the dollar has closed above 140 yen since Oct. 28, 1987. Later, in London, it was quoted at 142.55 yen.

In London, the dollar gained against the British pound and was quoted at 1.5750 compared with 1.6190 late Friday, its best showing since August 1987.

The dollar's rise hit precious metals sharply.

Gold traded in London at a bid price of $359.25 a troy ounce, compared with late Friday's $365.75.

Silver was quoted in London at a bid price of $5.07 a troy ounce, down from Friday's $5.35.

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