Shares markets gripped by Dubai debt uncertainty

Collection of islands off Dubai known as The World

Problems at The World? Development company Nakheel's stand-out project

Worries over Dubai's debt problems have rattled Europe's share markets for a second day running.

The main share indexes in London, Paris and Frankfurt all opened more than 1% lower before recovering.
The moves followed news from the state-owned Dubai World that it would delay repaying some of its debt. 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."
Holiday 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.

WHAT IS DUBAI WORLD?

The emirate's flag bearer in global investments

Has 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 ports

Property arm Nakheel built The Palm Islands and The World developments

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.
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.

SOURCE: BBC.CO.UK