Wall Street suffered another day of losses as political tensions with China and another profit warning from a major US company took their toll.

US stocks have taken fright at a stand-off between the US government and Beijing over a US Navy spy plane that was forced to land in Southern China.

A rally on the blue-chip Dow Jones Industrial Average index - representing 30 of the US' top companies - swung back after President George W. Bush demanded access to Navy personnel on the plane in televised statement.

China has said it will give the go-ahead for American officials to visit the crew of a US spy plane, but the offer falls short President Bush's request for "immediate access".

Three US warships are standing by amid rising political tension.

"Clearly, (the American-Chinese stand-off) is not a positive signal for the market," said Bernard Horn, a portfolio manager with Polaris Capital Management.

Dealers added that the jittery markets are prone to react adversely to any perceived problem in the political or financial arena.

More losses

The Dow shed 100 points, or more than 1%, at its close to 9,777 in the first trading day of the second quarter.

The technology-laden Nasdaq composite index finished down 57 points, over 3%, at 1,782, the lowest closing since late October 1998.

The markets were also not helped by a fresh profits warning from the financial services company, American Express.

The company, which is one of the Dow's 30 stocks, warned that its profits for the first-quarter will be down 18% because of losses on a portfolio of bond investments.

Its shares closed down nearly 4% at $39.71.

Manufacturing data

Stronger-than-expected manufacturing data also did little shore up the markets.

A closely watched index of US manufacturing activity - the National Association of Purchasing Management - showed signs of improvement in March for the second month in a row.

"I don't think it adds any certainty to investors' uncertainty about the future," said Brett Gallagher, head of US equities at Julius Baer.

Last quarter

The first quarter of 2001 ended with US share prices in the doldrums.

The Dow Jones index suffered its worst first-quarter performance since 1960, ending down 9% at 9,870 points since the beginning of the year.

The first-quarter picture for the Nasdaq index wasn't pretty either. It closed at 1,839 points, 26% lower than where it started the year.