Dow dives 42 points

NEW YORK The stock market took its sharpest drop in five weeksMonday, hit by selling attributed to spreading worries about thereal-estate outlook.

The Dow Jones industrial average fell 42.02 points to 2,697.53,for its biggest single-day loss since it dropped 47.34 points Nov. 6.

Declining issues outnumbered advances by more than 7-to-2 innationwide trading of New York Stock Exchange-listed stocks, with 361up, 1,289 down and 362 unchanged. Volume was 184.79 million shares,down from 240.39 million in the previous session.

Brokers said traders remained uneasy about the outlook forreal-estate finance and regional banks after the Bank of New Englandon Friday announced projected increases in its loan-loss reserve andnon-performing assets.

In the past couple of weeks, Wall Street has been devotingincreased attention to the soft real estate market in many parts ofthe country, and the problems real-estate debt might pose shouldprices of properties lag for an extended period.

Some observers contend that the situation could become a primarycontributing factor to a debt-induced business slump in 1990.

Bank of New England shares led the active list, down 1 1/2 at 71/2 following a 3 3/8-point drop Friday.

Among other mortgage and regional banking issues, CitytrustBancorp fell 2 1/2 to 14 5/8; Bank of Boston 7/8 to 16 1/4;Shawmut National 1 1/2 to 17 7/8; First Interstate Bancorp 4 3/8 to43 1/8; Federal National Mortgage 2 5/8 to 31 1/8, and Federal HomeLoan Mortgage 5 7/8 to 61 7/8.

Losers among the blue-chip industrials included IBM, down 1 3/8at 93 5/8; AT&T, down 3/4 at 46; USX, down 3/4 at 34 1/8, andMcDonald's, down 3/8 at 33 7/8.

Marriott dropped 1 to 33 5/8. The company announced arestructuring program, including a planned move out of the fast-foodand family restaurant business, but also estimated lowerfourth-quarter earnings.

The dollar ended mixed against key foreign currencies in quiet,directionless trading. Currency dealers said market activity waslight since many traders already have started to close out theirbooks for the calendar year.

In Tokyo, the dollar closed at 144.22 Japanese yen, down from144.30 yen Friday. It traded at 143.725 yen in New York, down from144.15 yen Friday.

Gold declined in London to a late bid price of $409.25 an ouncefrom $412.25 Friday. On the Commodity Exchange in New York, goldbullion for current delivery settled at $411.80 a troy ounce, down$2.10 from Friday.

On New York's Comex, silver bullion for current delivery closedat $5.565 a troy ounce, down from $5.607 Friday. Silver fell inLondon to $5.55 an ounce from $5.62.

Most grain and soybean futures prices fell slightly on theChicago Board of Trade as badly needed precipitation fell in U.S.winter wheat region and the Brazilian soybean belt.

In the Great Plains, the precipitation was in the form of snow,which should help insulate the dormant winter wheat crop from thebrutal cold in the nation's midsection. The development was bearishfor new-crop wheat contracts, those for delivery next spring.

Sub-zero temperatures in the Plains and Midwest helped supportthe wheat and soybean markets last week. Temperatures have warmed upslightly but are expected to plunge again before the weekend.

At the close, wheat futures were 1 1/4 cents lower to 2 centshigher with December at $4.15 a bushel; corn was unchanged to 1 1/2cents lower with December at $2.34 1/2 a bushel; oats were 1 1/2cents to 2 3/4 cents lower with December at $1.42 a bushel, andsoybeans were 1/2 cent to 2 1/2 cents lower with January at $5.811/2 a bushel.

On the bond market, the government's 30-year bond gained 5/32point, or $1.56 per $1,000 in face amount. Its yield, which fallswhen prices rise, declined to 7.83 percent from 7.85 percent lateFriday.