Growing anticipation of cuts in interest rates by central banks of leading industrialized nations has not prevented another up-and-down day on world financial markets. U.S. stock markets fell sharply Monday in volatile trading. The Dow Jones Industrial Average dropped 2.4 percent (203 points) to finish at 8,176.  The S&P 500 lost 3.2 percent (28 points) to close at 849 and the NASDAQ fell three percent (46 points) to end at 1,506. From Washington, VOA's Michael Bowman reports.

Stocks took another plunge in Asia Monday, with shares in Tokyo falling more than six percent to their lowest level in more than two decades, amid fears that an increasingly strong Japanese currency will harm exports. Investor pessimism spread to Europe, where Paris finished the day down by nearly four percent. London closed fractionally lower, while Frankfurt ended fractionally higher.

In the United States, markets appeared to react to news that new home sales recorded a modest increase, even as the median price of American homes dropped to its lowest level in four years.

After seeing Wall Street's main stock index plummet by 40 percent in recent weeks, investors are trying to figure out whether share prices will recover or go even lower, according to Alan Valdes, a floor trader on the New York Stock Exchange.

"There is no way to figure out where this market is going to go anymore. It is, literally, impossible to figure out," he said.

But Eugene Peroni of the US-based firm Advisors Asset Management says he sees good buying opportunities for investors.

"We are still getting selling based on those that continue to worry about the economic outlook," said Peroni. "On the other hand, there are those investors that are beginning to sense that the market is overshooting on the downside [has sunk lower than economic conditions warrant], and it is presenting some good values."

Later this week, all eyes will be on the Federal Reserve as it meets to plot strategy. The US central bank has cut interest rates repeatedly in the last year in response to the slowing American economy. Earlier this month, the Fed acted in concert with the European Central Bank to lower interest rates to combat a global credit crunch.

Investors are hoping for a repeat in coming days, according to Art Hogan, investment strategist at the firm Jefferies and Company.

"What I would love to see the Fed do, if they are going to cut rates, is to do it in a synchronized fashion, as they did the last time," said Hogan. "The Fed moving alone is not the optimal situation."

Speaking in Madrid, European Central Bank chief Jean-Claude Trichet said lower interest rates are a possibility - although he did not indicate a move is likely this week.

"I consider possible that the governing council would decrease interest rates once again at its next meeting on the sixth of November. It is not a certainty; it is a possibility," said Trichet.

Despite signs that tight credit conditions are relaxing in many countries, many economists are expressing fears that the relief may be coming too late to avoid a global recession.

Meanwhile, efforts to promote lending are continuing. The US Treasury says it has signed agreements with nine U.S. banks, and will purchase stock in those financial institutions in order to boost their capital and make it easier for them to grant loans to businesses and consumers.

The United States is one of several nations to embrace partial nationalization of its banking sector in response to the global credit crunch.