Stocks Climb 7

NEW YORK Stocks gained ground again today, despite lower bondprices.

The Dow Jones industrial average rose 7.26 points to close at3,651.25.

Advancing shares outnumbered advances on the NYSE, with 1,173up, 777 down and 655 unchanged. Volume on the floor of the NewYork Stock Exchange was 241.5 million shares.

The market was treading water in abreviated volume ahead of theLabor Day weekend holiday, said Bill Allyn, a managing director atJefferies & Co.

Stocks responded little to news the economy has been strongerthan many economists had expected.

The government said the economy grew at a modest 1.8 percentannual rate in the April-June quarter. That was up from the 1.6percent growth previously estimated and better than the 1.0 percentprivate economists had expected.

Later, the Conference Board said its consumer confidence indexmeasured 59.0 in August, higher than the 57.0 estimated by economistsbut slightly lower than July's 59.2 reading.

The bond market, however, reacted to the news by declining.Bonds often fall on news of an improving economy because growth brings the threat of inflation, which erodes the value offixed-income securities.

Early in the afternoon, stocks were mirroring bonds, Allyn said.Bonds and stocks have often moved in tandem recently because the lowmarket interest rates that come with higher bond prices make thepotential returns from stocks more attractive.

The U.S. dollar was mixed today against other major currenciesin early European trading.

In Tokyo, the dollar closed at 104.18 yen, up 0.28 yen fromMonday's close. Later in London, the dollar was quoted at 104.21yen.

In London, the British pound was quoted at $1.4993, up from$1.4990 late Monday.

London's major bullion dealers fixed a recommended gold price of$370.60 per ounce at midmorning, up from $368.75 Friday. Londonmarkets were closed Monday for a bank holiday.