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Dubai stocks drop 6% on new fears Dubai stocks drop 6% on new fears
(30 minutes later)
Shares in Dubai's and Abu Dhabi's main stock markets have dived at least 6% in early trade.Shares in Dubai's and Abu Dhabi's main stock markets have dived at least 6% in early trade.
It came after Dubai's property developer, Nakheel, asked for trading of its Islamic bonds to be suspended.It came after Dubai's property developer, Nakheel, asked for trading of its Islamic bonds to be suspended.
Shares are trading for the first time since the state-owned Dubai World asked for an extension on repaying its debts, after a four-day break for Eid. Shares are trading for the first time since the state-owned property company Dubai World asked for an extension on repaying its debts.
The central bank of the United Arab Emirates said on Sunday it would provide banks with extra liquidity.The central bank of the United Arab Emirates said on Sunday it would provide banks with extra liquidity.
Dubai's Financial Market Index tumbled 6.9% to 1,948.83 in the first hour of trading, while shares in the Abu Dhabi Securities Exchange nosedived 7.4%. Dubai's Financial Market Index tumbled 6.9% to 1,948.83 in the first hour of trading after the four-day break for the Eid holiday, while shares in the Abu Dhabi Securities Exchange nosedived 7.4%.
Construction and financial stocks slumped nearly 10%. The debt-ridden Dubai World fell 15%.Construction and financial stocks slumped nearly 10%. The debt-ridden Dubai World fell 15%.
World reaction
While shares in the Middle East dropped sharply, Asian shares rebounded on Monday on hopes the Dubai debt crisis will not spread to other financial markets after the UAE central bank decision.
Banks such as Mizuho Financial and Mitsubishi UFJ Financial Group in Tokyo, and HSBC and Standard Chartered in Hong Kong led the rally.
Tokyo's Nikkei 225 index rose 2.9%, while Hong Kong's Hang Seng gained 3.6% and stocks in Shanghai rose 2.5%.
Shares Samsung C&T, builder of the Burj tower in Dubai that will be the world's tallest when completed, gained nearly 5%.
The yen rose against the dollar after the announcement from Nakheel, paring earlier declines.
The South Korean won also gained after the finance ministry said its banks had "limited" exposure to Dubai debt.
Crude oil rose by 1% to more than $76 a barrel, after the benchmark commodity slid last week on fears over Dubai's financial health.
Bank assistanceBank assistance
On Sunday, the central bank of the United Arab Emirates (UAE) said it would provide banks with extra liquidity. On Sunday, the central bank of the United Arab Emirates (UAE) said it was setting up a facility to provide banks with extra liquidity.
The liquidity will be available to all UAE banks as well as foreign banks operating in the Emirates.The liquidity will be available to all UAE banks as well as foreign banks operating in the Emirates.
The bank added that the banking system in the UAE was more sound and liquid than a year ago.The bank added that the banking system in the UAE was more sound and liquid than a year ago.
That came after Wednesday's announcement from Dubai World asking for a suspension on its debt repayments, which sent world stock markets tumbling.That came after Wednesday's announcement from Dubai World asking for a suspension on its debt repayments, which sent world stock markets tumbling.
Meanwhile, neighbouring Abu Dhabi has said it will "pick and choose" how to assist Dubai.Meanwhile, neighbouring Abu Dhabi has said it will "pick and choose" how to assist Dubai.
"We will look at Dubai's commitments and approach them on a case-by-case basis," an Abu Dhabi government official said on Saturday."We will look at Dubai's commitments and approach them on a case-by-case basis," an Abu Dhabi government official said on Saturday.
"It does not mean that Abu Dhabi will underwrite all of their debts," he added."It does not mean that Abu Dhabi will underwrite all of their debts," he added.