New York ? New fears of terrorism sent stock markets tumbling around the world Monday and extended Wall Street’s selloff into a second week.

U.S. investors reacted to market declines in Japan and Europe following reports that the al-Qaida terrorist network had 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 fell more than 130 points before regaining ground late in the session. The declines came despite a better-than-expected report on business inventories and news that several companies were 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 E. 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.”

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

The 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 terror 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 declining 3.2 percent.

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

Traders conduct their business near the end of the day at the New York Stock Exchange. New fears of terrorism sent markets diving around the world Monday, extending Wall Street's selloff into a second week. The Dow Jones industrials fell more than 130 points before regaining some ground late in the session.

“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 Saturday in Turkey. “I hardly find anything else to explain the fall.”

Citing consistently good economic news, strong earnings and continued improvement in jobs growth, most analysts expressed hopes for a rally by the end of the year.

Financial services companies were 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 federal regulators said it had agreed to change some trading practices and pay a $50 million penalty to settle charges.

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

Travelers Property Casualty Corp. announced it would combine with The St. Paul Cos. Inc. in a $16.5 billion stock deal that will create the nation’s second-largest insurer. St. Paul ended the day up 97 cents at $37.74. Travelers’ class A shares were unchanged at $16.03, while class B shares fell 2 cents to $16.04.

Also Monday, auto parts maker ArvinMeritor Inc. said it would increase its hostile takeover bid for rival Dana Corp. Dana said its board will review the offer. ArvinMeritor lost 12 cents to close at $17.94, while Dana dropped $1.41, or 8.5 percent, to close at $15.24.

And Sun Microsystems Inc. announced it was planning a partnership with chip maker Advanced Micro Devices Inc., an alliance that could help the two smaller companies better compete against larger producers such as Intel Corp. Sun lost 2 cents to close at $4.08, while AMD fell 50 cents to $17.36; Intel shed 57 cents to close at $32.23.

Lowe’s Cos. Inc. dropped 72 cents to close at $57.91, despite a 33 percent rise in third-quarter profits.