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MARKET RECOVERS FROM EARLY PLUNGE

The Dow Jones industrials appeared to be recovering after erasing significant morning gains, as bargain hunters came in and bought at reduced prices.

At 3 p.m., the Dow Jones industrial average was down 12.88 at 7,882.78, having recovered from a drop of 184.61 to 7,711.05 in the first half-our of trading.

Broad-market indicators were generally lower. The Nasdaq composite index was down 1.01 at 1662.76, while the Standard & Poor's 500 index was down 1.59 to 1018.50.

The Dow fell at the opening bell just as Congress released videotapes and volumes of documents of President Clinton's testimony about his affair with Monica S. Lewinsky. The testimony underscored Clinton's precarious political posture, as Congress continues to sort out whether and how to impeach him.

Investors seemed to take the tapes in stride, and after a quick, short downturn this morning, they came into the market as buyers.

Still, the stock market has some serious problems in dealing with the Asian financial crisis, especially after the apparent unravelling in in Tokyo of a set of bank stabilization measures. Investors view bank reform in Japan as critical to a financial rebound there.

"It's clear that Japanese policymakers recognize that there's a financial crisis, but there's nobody ready to take the steps to stop the financial crisis," said Hugh Johnson, chief market strategist at First Albany Corp.

"Rome is burning, and the Japanese Parliament are fiddling, and that's very very troubling to me and obviously to markets around the world."

Declining issues led advancers by more than 2 to 1 on the New York Stock Exchange, where volume was light at 390.43 million shares.

In Tokyo, the Nikkei fell sharply in reaction to the apparent unraveling of an agreement on a set of bank stabilization bills. Investors view bank reform in Japan as critical to a financial rebound there.

Tokyo's Nikkei stock average fell 2.8 percent. In afternoon trading, Frankfurt's DAX index was down 3.4 percent, while London's FT-SE 100 was down 1.8 percent.

J.P. Morgan tumbled 3 1/4 to 85 3/4 , leading the Dow industrials lower. Chase fell 3 1/8 to 44 5/1 6. Citicorp fell 4 1 3/1 6 to 92 1/1 6. International Business Machines Corp. fell 3 9/1 6 to 120 7/8 and McDonald's Corp. dropped 3 to 53 3/4 .

AlliedSignal Inc. fell 1 1/2 to 34 1/4 after announcing Friday it had cut by half the number of AMP shares it intends to buy as part of a hostile takeover attempt, after AMP lowered the threshold at which an anti-takeover plan kicks in.

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