U.S. investors reacted to market declines in Japan and Europe following reports that the al-Qaida terrorist network has claimed responsibility for weekend attacks in Turkey and named Japan and other U.S. allies as potential targets. But analysts said some of Wall Street’s slide was due to normal profit taking.

The Dow Jones industrials plunged more than 130 points before regaining ground late in the session, despite a better-than-expected report on business inventories and news that several companies are in merger talks, which often gives the market a boost.

"This market is vulnerable to good news, bad news or no news, so certainly the news of terrorist activity over the weekend and new threats from al-Qaida will provoke a reaction," said Alfred Goldman, chief market strategist at A.G. Edwards & Sons Inc. "But I do not see a serious downside from here; there’s too much good going on."

According to preliminary calculations, the Dow ended the day down 57.85, or 0.6 percent, at 9,710.83, following a weekly decline of 0.4 percent.

Broader market indexes also fell. The Nasdaq composite index closed down 20.65, or 1.1 percent, at 1,909.61, following a weekly drop of 2.1 percent. The Standard & Poor’s 500 index lost 6.72, or 0.6 percent, to close at 1,043.63, after falling 0.3 percent last week.

In Tokyo, government leaders shrugged off the latest terrorism threats, but the Nikkei stock average lurched to a three-month low following the reports about al-Qaida, closing down 3.7 percent.

European markets followed, with France’s CAC-40 losing 2.6 percent, Britain’s FTSE 100 falling 1.3 percent and Germany’s DAX index down 3.2 percent.

Some of the declines in Britain could be related to this month’s interest rates hikes, said Francois Lemoine, a Paris-based stock strategist for bank BNP Paribas. But there was little doubt that many investors were nervous about the terrorist threats.

"I don’t really see what’s driving markets down apart from the fact that there have been a number of attacks over the weekend," Lemoine said, referring to the bombing of two synagogues in Turkey on Saturday.

A U.S. report showed America’s businesses boosted their stockpiles of unsold goods in September for the first time in six months, a sign that companies may be feeling more confident about the economy.

Financial services companies are under pressure related to the ongoing investigation of mutual fund trading practices. Morgan Stanley, which saw earlier declines, gained 9 cents to close at $55.03 after agreeing to change some trading practices and pay a $50 million penalty.

Several companies were in merger talks today, but that did little to raise the major indexes.

Travelers Property Casualty Corp. announced it will combine with St. Paul Companies in a $16 billion stock deal that will create the nation’s second-largest insurer. St. Paul was up 97 cents at $37.74 on the news.

Also today, auto parts maker ArvinMeritor said it will raise its hostile takeover bid for rival Dana Corp. ArvinMeritor lost 12 cents to $17.94; Dana dropped $1.41 to $15.24.

Sun Microsystems announced it plans a partnership with chip maker Advanced Micro Devices, an alliance that could help them compete against larger producers such as Intel Corp. Sun lost 2 cents to close at $4.08, AMD fell 50 cents to $17.36; Intel shed 57 cents to close at $32.23.