The unfolding events in Dubai continued to weigh on stock markets across Europe today, despite attempts by the central bank of the United Arab Emirates to contain the financial crisis.

On the first day of trading after the Eid holiday, stock markets in the UAE had their first chance to react to the announcement last week that Dubai World – the owner of P&O shipping and extensive property in the UK – was struggling to meet repayments on its $59bn (£36bn) debt. In Dubai, the stock market plunged 7.3% while in Abu Dhabi, the fall was 8.3%. A combined $9bn was wiped off UAE markets.

In London, where many banks have large exposure to the Dubai economy, continued anxiety about the potential repercussions of the crisis dragged the FTSE 100 index of leading shares 1.1% lower, to close at 5190.68, erasing gains made on Friday. James Hughes, market analyst at CMC Markets, said the session had been “dominated by nervousness surrounding the debt situation in Dubai” and there remained “suspicions that we could well get yet more surprises”.
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KPMG is leading a committee of creditors – including Lloyds, HSBC, Royal Bank of Scotland and Standard Chartered and two local banks – in seeking meetings with Dubai officials. David Teather, The Guardian.

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