There's an old saying on Wall Street, "Buy on the rumor, sell on the news." Savvy traders who move faster than their competitors can make money trading stocks and currencies on the basis of rumors, leaving the fact-checking and concerns about accuracy to others.

Yesterday one of the most prominent rumors circulating in the world's financial markets was that The Washington Post had reported that the Commerce Department had understated the November trade deficit by $3 billion. The Post published no such story, but that didn't matter to the traders who profited as the rumor temporarily depressed the value of the dollar relative to other currencies.

The Post's news bureau in London and its main office were flooded with calls from traders, news organizations and others seeking confirmation of the rumors. Because The Post is distributed primarily in the Washington area, it is a convenient tool for rumor-planting; traders in Hong Kong, Tokyo and London hearing the false rumors about a Post story had no immediate way to verify them.

Even after the Reuters news service sent out a story on its global financial news wires indicating the rumors were inaccurate, they continued to spread. Rumors that The Post had reported the news shifted later in the day to rumors that The Post had discovered the hidden $3 billion and would report it in today's editions. "Over here in West Germany on the stock exchange we heard The Washington Post gave out an article which said the trade deficit is $16 billion instead of $13 billion," said Alexander Kordick, a trader in Dusseldorf who called to verify the report.

"The rumors were that The Post reported the trade figures were purposely fudged or smudged or revised substantially downward," said Ian Spence, chief foreign currency trader at Manufacturers Hanover Trust Co. in New York.

"That caused the dollar to trade off a little bit. Who knows where it came from," he said.

In London, Anthony Thomas, chief international economist at Kleinwort Grieveson Securities, said the rumors may have started in the Far East, where markets were closing as the trading day began in Europe.

The rumors continued around the globe as trading began later yesterday morning in U.S. financial markets.

Reuters distributed a report denying rumors about trade deficit reports in The Post and The Wall Street Journal at 8:00 a.m. (EST) yesterday, but that didn't slow the rumor mill.

Some of the callers to The Post, including Italian journalists seeking to verify the rumors, asked whether Reuters had distributed an account of a Post story saying that the government had fudged the trade numbers.

Robert Ortner, undersecretary for economic affairs at the Commerce Department, blamed the rumors on speculators trying to recoup losses suffered last week after they bet incorrectly on how large the trade deficit would be.

When the Commerce Department announced Friday that the November trade deficit was $13.2 billion, lower than generally expected, the dollar and stock markets surged.

"There is no foundation in fact and no substance to that rumor," Ortner said yesterday when asked about possible fudging of the trade numbers.

Another Commerce official called the rumors "a reverse twist on what used to happen," when speculators would float rumors in advance of the release of the highly publicized trade figures.

As a matter of routine, the Commerce Department released November trade deficit figures calculated in an alternative manner yesterday, but these are not as widely followed as the numbers released last week.

The report released yesterday, which strips away the value of freight and insurance from imports, indicated the trade deficit was $1.5 billion less than the initial figure.

Attempts to confirm the original source of the Post rumors and their precise impact on various financial markets proved as elusive as the rumors themselves.

But Kleinwort's Thomas said the newspaper rumors drove the dollar and stock prices down somewhat in Europe.

"It just came out of nowhere and spread like wildfire," he said.

Staff writers Karen DeYoung in London and Stuart Auerbach in Washington contributed to this report.