Octave fails to plot

I am running octave 3.4.0 on mac OS X 10.11 along with gnuplot 4.2.6. Octave appears

to perform all mathematical computations and displays results--but it hang up (without any error message) even when I try to plot a simple array using plot(x,y) and requires cntr C to terminate. The version of gnuplot has been modified as suggested and plots successfully as a stand alone program. I am executing setenv GNUTERM x11 before running octave and gnuplot and am using Xquatrz. It is as if octave fails to communicate with gnuplot

or with the display window.