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A late rally propelled the Dow Jones industrial average to its second straight closing high Thursday.

The closely-watched blue chip barometer rose 23.25 points to 3,523.28.

Advancing issues outnumbered decliners by about 13 to 9 on the New York Stock Exchange.

Big Board volume totaled 289.16 million shares, down from 342.42 million on Wednesday.

Broad-market indexes were higher. On the American Stock Exchange, the market value index rose 2.37 to 432.29, posting its thirteenth all-time high for the year. The NYSE's composite index rose 1.56 to 248.42, and the Nasdaq composite gained 7.00 to 697.43.

"Despite new highs, we have a mixed market with mixed signals," said Alan Ackerman, stock strategist at Reich & Co.

Analysts said blue chips benefited from the stability of interest rates and gold, which allayed inflation fears. Also, the upturn in the small cap stocks helped the blue-chip shares.

The Treasury's 30-year bond eased 5-16 point, or $3.13 per $1,000 in face value, lifting its yield back to 6.99 percent from 6.97 percent Wednesday. Spot gold for May delivery rose 50 cents to close at $374.20 an ounce. These developments disturbed Michael Metz, chief market strategist at Oppenheimer & Co., who has been saying for some time that inflation will eventually topple the market from its high valuations.

"We're in the process of denial," Metz said on Thursday. "We have a whole country that's denying that we have a deficit problem and an inflation problem."

Still, a number of Dow components finished sharply higher. Disney rose 2 1/2 to 44; Minnesota Mining and Manufacturing advanced 1 5/8 to 115 1/4 ; United Technologies gained 1 1/4 to 53 1/4 and Sears added 1 7/8 to 55.

Citicorp led the most-active list on the New York Stock Exchange and rose 1/2 to 28 3/4 . Citicorp named Christopher Steffen, the former chief financial officer at Eastman Kodak, to oversee the banking corporation's financial controls and operations. The corporation also said it will sell 10 million shares of perpetual preferred stock, which will add $250 million to its capital base.

Pacific Enterprises rose 3/4 to 22 3/8 in heavy trading. The natural-gas holding company said late Wednesday that it had priced 7 million common shares at $21.625. Proceeds from the offering will be used to repay debt and for other corporate purposes.

Computer Associates rose 1 1/4 to 30. The software maker reported a rise in fourth-quarter net earnings to 57 cents per share from 33 cents. It also raised its semi-annual dividend to 7 cents a share from 5 cents.

Shares of Casino Magic Corp., up 2 3/8 to 79 5/8 , led a broad-based rise in gaming stocks on speculation that the group will benefit from an expansion of the casino business. Circus Circus was up 1 7/8 to 51 5/8 , Mirage Resorts gained 3 3/8 to 44 3/4 and Promus rose 1 5/8 to 47 1/4 .

"Casino Magic announced a three-for-one split and better than expected first quarter earnings on Friday and the stock has done well since then," said Martin Cosgrove at Wedbush Morgan Securities.

Triton Energy jumped 5 1/4 to 40 1/4 on positive news about its Colombian operations.

Technology stocks put in a good day in over-the-counter trading. Novell rose 1 1/4 to 32 3/4 , Microsoft rose 1 5/8 to 94 1/8 , and Sun Microsystems rose 2 1/8 to 30 3/4 .

Apple Computer gained 1 1/2 to 58 3/4 after Salomon Brothers increased its 1993 and 1994 earnings estimates for the company.

Dell Computer, which slumped Wednesday on fears its first quarter may be below some Wall Street estimates, rebounded 1 3/8 to 32 1/8 .

Among actively traded Nasdaq stocks, Spectrum Information Technologies Inc. lost 5 3/4 to 6, and MFS Communications (New), was up 4 5/8 to 24 5/8 .

Among other market indexes, the Standard & Poor's composite index of 500 stocks rose 3.02 points to 450.59, and the Wilshire Associates Equity Index -- the market value of NYSE, American and Nasdaq issues -- was 4,428.825, up 34.003 or 0.77 percent.

In another unusually volatile session, the Treasury market fell sharply on a late afternoon report that the nation's money supply surged unexpectedly last week.

Short-term Treasuries lost around 5-32 point and intermediate maturities were up to 5-16 point lower, the financial information service Telerate Inc. reported.

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