WALL Street fell more than 50 points in early trading yesterday triggering the automatic circuit breakers to stabilise the market.

The dollar also weakened on the foreign exchanges as concern grew about a possible rise in Japanese interest rates.

The plunge in the Dow Jones Index came after figures showing a fall in US industrial production of 0.6 per cent in January, the biggest monthly drop in almost five years. The monthly decline meant that industrial production was barely higher than a year earlier. The annual growth in industrial production has collapsed from 6.3 per cent at the start of 1995 to 0.1 per cent at the beginning of 1996.

Another sign of the depressed state of the manufacturing sector was the decline in the capacity utilisation rate to 81.9 per cent. This rate, which Mr Alan Greenspan, chairman of the US Federal Reserve, is known to watch closely, was, the lowest since November 1993.

Consumer confidence was also reported weaker. The preliminary University of Michigan consumer sentiment index fell from 89.3 in January to 86.6 in February. The expectations index fell from 78.7 to 74.6. "The fundamental picture of the economy looks soft, said Mr Mark Cliffe, international economist at HSBC Markets. He attributed the morning decline on Wall Street and the weakness of the bond market to "a collective bout of nerves over how strong the markets had been."

The dollar fell against both the yen and the deutschmark on the foreign exchanges. It closed almost one down at 105.34 yen and a pfennig down at 1.4617 deutschmarks. The main reason for the weakness of the dollar was growing worries about a possible rise, in Japanese interest rates later this year.

This concern was provoked by a statement made on Thursday by Japan's finance minister, Mr Wataru Kubo, to the effect that interest rates, which have been pushed down to a record low, were hurting pensioners.

Investors interpreted this as a warning signal that rates would move up earlier than had been thought.

Mr Cliffe said it was far too early for the Bank of Japan to drive up interest rates. "But as the recovery does gain momentum, there will be less incentive for the Bank of Japan to hold rates down."