Traders are looking for excuses for gloom, analysts say

The Dow Jones share index, which last week lost more than 3% of its value, closed down 1.3% at 10,102.89 points.

New York gloom was shared on the other side of the Atlantic, especially in Spain, where the main index closed down more than 4%.

Shares in the US and other big economies have now more than lost all the gains of this year's bull market.

Slowing down

The al-Qaeda fears - still not confirmed - more than outweighed broadly positive corporate news in the US, including optimistic forecasts from giants such as General Electric and Wal-Mart.

Most traders are waiting to see what sort of assessment comes out of the US Federal Reserve on Tuesday, when its latest interest-rate decision is scheduled.

The Fed is expected to leave US rates on hold.

But last week's bombing has shifted the perceptions of investors, analysts said, making them more likely to respond to gloomy than to cheering news.

"The investment community's attitude appears to have shifted meaningfully in the past week with many more investors now worrying about the economy," said Tobias Levkovich of Smith Barney.

There have been serious grounds for economic worries: in particular, the widening current-account deficit and feeble consumer sentiment point to a sharp deceleration in the US recovery.

'Lousy week'

News from Spain has been soured further for many US investors by the Socialist victory in the weekend's elections.

This is seen as likely to undermine the US-led coalition, and therefore raise the global political temperature.

But most analysts admitted that the news was a pretext for share-price falls, rather than a rock-solid reason for gloom.

"The Spain elections certainly have some ramifications on the war on terror, and the political implications aren't great for the US,".said Jay Suskind of Ryan Beck & Co.