``It's a structural problem. People are saying, 'We don't believe the numbers,''' said Akber Khan, a London-based analyst with Deutsche Bank.

London's Financial Times-Stock Exchange 100-share index was down 59.90 points, or 1.5 percent, at 3,934.60 Tuesday afternoon, reversing early gains, despite news that Britain's inflation rate had fallen to its lowest level in more 25 years.

On Monday, the FTSE fell 5.4 percent to its lowest close since Dec. 17, 1996, and the biggest single-day fall since the Sept. 11 terrorist attacks.

By midday Tuesday, Frankfurt's Xetra DAX fell 7.63 points, or 0.2 percent, to 3,904.88, and the Paris CAC-40 was down 43.15 points, or 1.3 percent, at 3,280.59.

With the U.S. dollar weakening against the Japanese yen and the euro, investor confidence has been shaken by accounting scandals at major American companies, and fears of more to come.

The Dow Jones industrial average briefly plunged more than 400 points Monday in New York, although it recovered to close 45 points lower for the day at 8,639.19. In early trading Tuesday, the Dow was down another 200 points.

European investors continued to be wary amid fears of further falls to come.

Major Asian stock markets had a difficult Tuesday, too.

Tokyo's benchmark 225-issue Nikkei Stock Average shed 124.73 points, or 1.20 percent, to close at 10,250.42. The Nikkei regained some ground by midday, but worries crept back toward the end of the day.

Singapore's Straits Times Index fell 23.91 points, or 1.5 percent, to 1,585.85, and benchmarks also fell more than 1 percent in Taiwan and South Korea.

In Hong Kong, the benchmark Hang Seng Index dipped 160.17 points, or 1.51 percent, to 10,421.49.

``One must wait to see if the declines in the U.S. dollar and U.S. stocks are an omen of more volatility to come,'' the Chinese-language Hong Kong Economic Journal said in a front-page commentary.

Deutsche Bank's Khan doubted there would be a quick end to the turmoil.

``We're nowhere near resolving the problems,'' he said. ``We're just going to continue to drift.''

© Copyright The Associated Press. All rights reserved. The information contained In this news report may not be published, broadcast or otherwise distributed without the prior written authority of The Associated Press.

07/16/2002 10:38
APO