Interest rates fell on Thursday on a decline in commodity prices.

Late in New York, the yield on the 30-year Treasury bond eased to 6.66%, down from 6.67%. The yield on the 10-year note fell to 5.76% from 5.78%, while the two-year note fell to 3.98% from 3.99%.

Gold Price Slips

Commodity prices, on the rise earlier in the week on the effects of Midwest flooding on crops, have settled down. The Commodity Research Bureau's index of 21 futures fell 1.15 point to 216.08.

The price of gold, another inflation indicator that had been rising earlier in the week, fell $2 to $395.80 an ounce on the New York Commodity Exchange.

"Now, with the negative influence of commodities out of the way, the fundamental message of a sluggish economy is returning to the bond market," said William Sullivan, money market economist at Dean Witter Reynolds Inc.

The improvement in commodity prices and an upbeat labor report boosted stocks. The Dow Jones industrial average gained 38.75 points to 3,514.42.

The government said that initial claims for unemployment insurance fell 12,000 to 327,000 last week. This was the biggest drop since February.

The dollar rose to 108.54 yen from 107.65 on Wednesday. A Japanese official rescinded his statement of the previous day that a further rise in the yen would not cat into profits of Japanese exporters.

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