UAE: Abu Dhabi posts record losses, despite Asian rebound

Dubai, 30 Nov. (AKI) - The stock markets of the United Arab Emirates slid on Monday as the government said it would not guarantee the debt of state-owned Dubai World. The market reopened for the first time since the entity sought to delay billions of dollars in debt last week.

Abu Dhabi's main stock market lost a record 8.3 percent, while Dubai's index lost 7.3 percent, in the largest fall in a year.

The National Bank of Abu Dhabi tumbled by 9.7 percent, amid fears that the region's banking industry will suffer serious damage.

Dubai World, which has total debts of 59 billion dollars, shocked markets around the world when it asked creditors on Wednesday if it could postpone its forthcoming debt payments until May 2010.

It was due to repay 3.5 billion dollars in debt in December and some investors fear that Dubai's problems could provoke more further financial turmoil and exacerbate the global credit crisis.

Dubai's finance minister, Abdulrahman al-Saleh, said the government would not guarantee Dubai World's debt.

"Creditors need to take part of the responsibility for their decision to lend to the companies," he said.

He told Dubai Television: "They think Dubai World is part of the government, which is not correct."

Banks and building stocks led declines in Dubai and Abu Dhabi while Dubai World shares lost 15 percent.

Dubai's main property developer Nakheel asked for trading of some of its Islamic bonds to be suspended on the first day of trading after the Eid al-Adah holiday.

The United Arab Emirates’ central bank eased credit for lenders saying it “stands behind” the country’s local and foreign banks amid fears of rising losses and speculation that Dubai World may default.

Banks will be able to borrow money from the regulator for half a percentage point above the three-month local benchmark interest rate, the Abu Dhabi-based Central Bank of the UAE said in a statement on Sunday.

Asian shares rebounded on Monday on hopes the Dubai debt crisis will not spread to other financial markets after the UAE central bank decision.

They closed before the announcement that Nakheel had asked to suspend some of its bonds.

Tokyo's Nikkei 225 index rose 2.9 percent, while Hong Kong's Hang Seng gained 3.6 percent and stocks in Shanghai rose 2.5 percent.