Blue-chip stocks retained modest gains at the close yesterday as investor uncertainty over the White House sex scandal allegations sapped a strong morning rally. Based on early and unofficial data, the Dow Jones industrial average gained 12.21 points to 7,712.94 after giving back an early gain of nearly 60 points.

Traders said news of relatively calm Asian markets and some solid earnings reports that triggered the initial upturn were offset by concern over the Washington allegations.

President Clinton denied once again yesterday that he had had a sexual relationship with former White House intern Monica Lewinsky or had asked anyone to lie about it.

"When (the rally) didn't sustain itself, traders jumped off," said Alfred Kugel, Stein Roe & Farnham senior investment strategist.

The Nasdaq composite index ended 14.46 points lower at 1,561.47.