Shares on Wall Street tumbled rapidly after the opening bell as traders sought to digest comments over the weekend in Washington by economic leaders about the heightened risk of inflation.

Within minutes of New York's stock market opening this morning, the Dow Jones Industrial Average fell more than 100 points, extending the 366 point fall on Friday evening.

However, decent third quarter earnings from Merck, the pharmaceuticals giant and Hasbro, the toy company helped reduce the loss to a 48 point fall to by the end of the first thirty minutes of trading.

Traders on Wall Street are twitchy ahead of the US Federal Reserve interest rate meeting next week.

Economists are expecting one more quarter point rate cut by Christmas - the Fed slashed rates by a half point in September in an attempt to avert the growing credit crisis in US markets.

Overseas markets were also unsettled. In the Far East, Tokyo's Nikkei tumbled 2 per cent and Hong Kong's Hang Seng fell almost 4 per cent. In lunchtime trading, the FTSE 100 was down 63 points to 6,464.90.

David Buik, analyst at Cantor Index, the city spread-better said: “We’re basically playing catch-up with what happened in New York on Friday.

“People got ahead of themselves thinking the credit crunch was over given what was a calmer week last week.”

On Friday, US stocks had suffered their biggest one-day fall for two months, the 20th anniversary of the Black Monday stock market turmoil, as nervous traders reacted to a spate of poor corporate results and renewed concerns about the credit crunch.

Caterpillar, the US construction equipment group, fuelled the sell-off by commenting that several of the key US industries it supplies were effectively in recession.

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