Bash-3.1.17 gets lost looking for end of string in certain contexts

[Richard]

Configuration Information [Automatically generated, do not change]:
Machine: i686
OS: linux-gnu
Compiler: gcc
Compilation CFLAGS:  -DPROGRAM='bash' -DCONF_HOSTTYPE='i686' 
-DCONF_OSTYPE='linux-gnu' -DCONF_MACHTYPE='i686-pc-linux-gnu' 
-DCONF_VENDOR='pc' -DLOCALEDIR='/mnt/STG1/share/locale' -DPACKAGE='bash' 
-DSHELL -DHAVE_CONFIG_H   -I.  -I/mnt/STG1/opt/sources/bash-3.1 
-I/mnt/STG1/opt/sources/bash-3.1/include -I/mnt/STG1/opt/sources/bash-3.1/lib   
-O2 -pipe
uname output: Linux lfs1 2.4.26-0 #1 Sun Aug 29 09:59:18 BRT 2004 i686 
GenuineIntel unknown GNU/Linux
Machine Type: i686-pc-linux-gnu

Bash Version: 3.1
Patch Level: 17
Release Status: release

Description:
        Bug uncovered as follows:
        
        Compiling grep-2.5.1a and during its tests, test #121 is not completed 
because of following error messages by bash:

        spencer1.script: line 602: unexpected EOF while looking for matching `''
        spencer1.script: line 608: syntax error: unexpected end of file

        The offending lines (602 thru 607) from spencer1.script are:

602     status=`echo 'beriberi'| { ${GREP} -E -e '(....).*\1' >/dev/null 2>&1 ; 
echo $?; }`
603     if test $status -ne 0 ; then
604             echo Spencer test \#121 failed
605             failures=1
606     fi
607     exit $failures

        FYI: Running same script thru bash-2.05b all tests in script complete 
successfully.

Repeat-By:
        Run testsuite of grep-2.5.1a with bash-3.1.17, or use above snippet as 
reference.