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Dubai uncertainty grips markets US shares tumble on Dubai fears
(30 minutes later)
Worries over Dubai's debt problems have rattled Europe's share markets for a second day running. US shares have opened lower as worries about Dubai's debt problems rattle world markets for the second day.
The main share indexes in London, Paris and Frankfurt all opened more than 1% lower before recovering. The Dow Jones index of leading US shares opened down 211 points, or 2%, at 10,253.39.
The moves followed news from the state-owned Dubai World that it would delay repaying some of its debt. It was the US markets' first chance to react to news that state-owned Dubai World had asked for more time to repay its debts.
US markets were closed for a holiday on Thursday when other world markets all suffered steep losses.
UK Prime Minister Gordon Brown described the fall in the markets as a "setback" but said it was "not on the scale of previous problems".UK Prime Minister Gordon Brown described the fall in the markets as a "setback" but said it was "not on the scale of previous problems".
"The world financial system is stronger now and able to deal with the problems that arise," he told reporters on his way to a Comonwealth leaders summit. "The world financial system is stronger now and able to deal with the problems that arise," he told reporters on his way to a Commonwealth leaders summit.

What went wrong in Dubai

Dubai does not have the enormous oil wealth enjoyed by its neighbours such as Abu Dhabi. Its main source of wealth has historically been as a port.
In recent years it has sought to make money from property development and luxury tourism, building impressive hotels such as the Burj al-Arab.
The global downturn left many financial workers unemployed. The population fell an estimated 17%, meaning there was little demand for new properties.
There was also less demand for luxury holidays. Dubai companies have borrowed money to fund huge building projects such as "The World" and are now unable to repay it.
There are jitters on financial markets about who lent all the money. European banks are estimated to have lent more than £50bn to the whole of the United Arab Emirates.
Dubai state-backed companies may also have to sell-off some of their assets overseas such as luxury property in London and the Turnberry golf course in Scotland.
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Earlier, Asia's markets had fallen sharply. Tokyo's benchmark Nikkei fell 3.2% to 9,081.52. In Hong Kong, the Hang Seng index ended down 4.84% at 21,134.5.
Dubai World is the centrepiece of the Gulf state's economy. David Buik, senior partner at BGC Partners, said: "You can't just say to the world: 'I don't want to pay my debts'. There is no income coming in from any of these properties. I think this is shocking PR."Dubai World is the centrepiece of the Gulf state's economy. David Buik, senior partner at BGC Partners, said: "You can't just say to the world: 'I don't want to pay my debts'. There is no income coming in from any of these properties. I think this is shocking PR."
Holiday hiatusHoliday hiatus
The news shook markets that are recovering from the collapse of the US housing market and contagion that threatened to rupture the global financial system last year. It was the timing of the announcement as much as the lack of clear information that heightened nerves. The first news emerged late on Wednesday, as the Muslim world was preparing for its Greater Eid celebrations. The news shook markets that are recovering from the collapse of the US housing market and contagion that threatened to rupture the global financial system last year.
Certain London-based hedge funds who had bet on Dubai World being bailed out could have an uncomfortable few weeks ahead Stephanie Flanders
BBC Economics Editor
Read more from Stephanie at Stephanomics
It was the timing of the announcement as much as the lack of clear information that heightened nerves. The first news emerged late on Wednesday, as the Muslim world was preparing for its Eid celebrations.
It also coincided with the closedown of the world's most important share market, with US markets winding down for Thursday's Thanksgiving holiday.It also coincided with the closedown of the world's most important share market, with US markets winding down for Thursday's Thanksgiving holiday.
Uncertainty of the scale of banks' exposure to Dubai hit banking shares at first. However, bank shares recovered strongly throughout Friday morning.Uncertainty of the scale of banks' exposure to Dubai hit banking shares at first. However, bank shares recovered strongly throughout Friday morning.
Threat to confidenceThreat to confidence
The biggest underlying fear is that Dubai's problems could reignite the international financial turmoil of the credit crisis.The biggest underlying fear is that Dubai's problems could reignite the international financial turmoil of the credit crisis.
WHAT IS DUBAI WORLD? The emirate's flag bearer in global investmentsHas a central role in the direction of Dubai's economy Assets include DP World, which caused a storm when trying to take over six US portsProperty arm Nakheel built The Palm Islands and The World developments What is Dubai and who runs it? Dubai views: 'The end of the dream' Send us your commentsWHAT IS DUBAI WORLD? The emirate's flag bearer in global investmentsHas a central role in the direction of Dubai's economy Assets include DP World, which caused a storm when trying to take over six US portsProperty arm Nakheel built The Palm Islands and The World developments What is Dubai and who runs it? Dubai views: 'The end of the dream' Send us your comments
Chris Skinner, chairman of the Financial Services Club, said: "We're very heavily interlinked. Dubai is the key financial centre in the Middle East."Chris Skinner, chairman of the Financial Services Club, said: "We're very heavily interlinked. Dubai is the key financial centre in the Middle East."
Any knock to economic confidence could lower global demand for a whole range of commodities, including oil.Any knock to economic confidence could lower global demand for a whole range of commodities, including oil.
Oil prices have dropped sharply. US crude fell 5% to $74.23 a barrel and London Brent Crude was down $1.47 to $75.42.Oil prices have dropped sharply. US crude fell 5% to $74.23 a barrel and London Brent Crude was down $1.47 to $75.42.
Dubai, which has less oil money than many of its neighbours, became a trading and tourism hub with global ambitions.Dubai, which has less oil money than many of its neighbours, became a trading and tourism hub with global ambitions.
Dubai World, the conglomerate that led the emirate's expansion, had $59bn (£36bn) of liabilities as of August, a large proportion of Dubai's total debt of $80bn. Its subsidiary Nakheel was the builder of the landmark palm tree-shaped island developments off Dubai.Dubai World, the conglomerate that led the emirate's expansion, had $59bn (£36bn) of liabilities as of August, a large proportion of Dubai's total debt of $80bn. Its subsidiary Nakheel was the builder of the landmark palm tree-shaped island developments off Dubai.
Are you in Dubai? What is your reaction to the Dubai World announcement? What effect is the economic recession having on Dubai? Send us your views using the form below.Are you in Dubai? What is your reaction to the Dubai World announcement? What effect is the economic recession having on Dubai? Send us your views using the form below.
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The BBC may edit your comments and not all emails will be published. Your comments may be published on any BBC media worldwide. Terms & ConditionsThe BBC may edit your comments and not all emails will be published. Your comments may be published on any BBC media worldwide. Terms & Conditions