Markets around the world are preparing for further volatility this week after being buffeted on Friday as concerns about interest rate rises and the valuation of equities scared US investors.

Global markets will open in the shadow of a 5.92 per cent fall last week in the Dow Jones Industrial Average, the heaviest weekly decline for the Dow since October 1989 and against a backdrop of continued strength of the yen against the US dollar.

In a coincidence that could further unsettle investors, tomorrow is the 12th anniversary of the stock market crash of 1987.

Analysts warned yesterday there would be little in US economic data to be released this week to clarify the mixed picture of US economic performance or settle whether the Federal Reserve will have to raise interest rates at its meeting next month.

Friday's 266.9 point fall in the Dow was prompted partly by news that US producer prices had risen 1.1 per cent in September, a higher month-on-month figure than many expected.

Analysts predict that inflation figures for September, due tomorrow, will be benign. But Credit Suisse First Boston said in its weekly strategy note that "another solid rise" in imports in the US trade balance figures, due out on Wednesday, "would only raise market angst over the ability of the US to finance a widening current account deficit". Wall Street Economists expect the trade deficit to stabilise at about $25 billion (€23 billion) for August.

Investors are also starting to doubt the sustainability of US corporate profits.