There has always been an element of the fantastical in A.S. Byatt's work (Angels & Insects, Possession), so it shouldn't come as a surprise that she has finally published five pure fairy tales (two of which have already appeared as parts of previous books). The three new tales in The Djinn in the Nightingale's Eye come complete with modern-day morals, expressed through the experiences of old-fashioned figures. In ''Dragon's Breath,'' for example, a happy, comfortable town is jolted out of its peacetime torpor by three enormous dragons who smash the place to bits but leave it with an interesting history. These are charming but not absorbing stories; they work better embedded in novels than on their own. B-


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