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Dubai stocks plunge as debt crisis fears continue

Dubai stocks plunge as debt crisis fears continue
01.12.2009

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.

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%.

Construction and financial stocks slumped nearly 10%. The debt-ridden Dubai World fell 15%.

Bank assistance

On Sunday, the central bank of the United Arab Emirates (UAE) said it would provide banks with extra liquidity.

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.

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.

"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.
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