  We present RXTE observations of LMC X-2 obtained during a five-day interval
in 1997 December, during which the source was radiating at a mean intensity
near the Eddington limit, and strongly variable on timescales of seconds to
hours. The shapes of the X-ray color-color and hardness-intensity diagrams
during the observations, the presence of VLFN and HFN in the power spectra, and
the high intrinsic X-ray luminosity of LMC X-2 (which historically spans
0.4-2.0*L_{Edd} for reasonable estimates of the neutron star mass) are more
characteristic of a Z-source in its flaring branch than of an atoll-source. On
this basis, we provisionally reclassify LMC X-2 as a Z-source, the eighth such
source known and the first to be detected beyond our Galaxy.
  Using periodogram and Fourier analysis of the X-ray lightcurve we detect an
apparently-significant modulation with a period of 8.160+/-0.011 hrs and a
semi-amplitude increasing from 14% in the 1.8-4.0 keV range to 40% at 8.7-19.7
keV. This X-ray modulation appears to confirm a candidate orbital periodicity
determined from optical photometry ten years prior to our campaign, but we
cannot rule out a chance alignment of intrinsic X-ray flares. Current RXTE ASM
light curves and archival EXOSAT observations show no sign of such a pronounced
periodicity.
  The X-ray spectrum of LMC X-2 can be well fit using variations of simple
Comptonization models. Fits to phase(=intensity)-resolved spectra show strong
correlations between the power law slope (in one parameterization) or the depth
to optical scattering (in another) and phase. We discuss the implications of
these results for the inclination, geometry, and emitting regions of the LMC
X-2 system.
