Dubai exchange nosedives as trading resumes
Dubai's main stock exchange dropped more than 6 percent on the first day of trading since officials went public with the city-state's huge debt crisis, AP reported.
Shares in debt-ridden Dubai World, the emirate's investment and development engine, were off more than nearly 15 percent in early trading Monday when the market opened.
The drop mirrored the turmoil on world markets after Dubai officials last Wednesday announced that Dubai World would seek a six-month delay in paying creditors on nearly $60 billion in debt.
In an effort to calm the regional markets that have closed since last week due to an Islamic holiday, the United Arab Emirates central bank on Sunday pledged to stand behind foreign and domestic banks in the country and offered additional money.
Asian stock markets rebounded Monday from their steep fall last week after the United Arab Emirates moved to contain the fallout from Dubai's debt crisis.
Major markets jumped by 2 percent or more after tumbling on Friday amid fears Dubai's debt problems could lead to more financial instability and were a sign of hidden troubles elsewhere in the still weak world economy.
Once-booming Dubai has become the main victim of the global recession in the Gulf.
In a statement Sunday, the UAE's central bank said it had sent notice to Emirati banks and foreign banks with branches in the country making clear they would have access to "a special additional liquidity facility."
The UAE has been guaranteeing bank deposits since October 2008, but the pledge for new help at generous terms stems from concern that UAE banks have some of the biggest exposure to Dubai World's debt. Several have been downgraded by international ratings agencies or been placed on review for downgrades.